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Mainstream, VOL XLIX, No 43, October 15, 2011

Free Trade Agreements—Impact on Livelihoods, Health and Food Security

Wednesday 19 October 2011, by Bharat Dogra

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At the time of the formation of the World Trade Organisation (WTO) and the related inter-national agreements such as Trade-Related Intellectual Property Rights (TRIPS), serious apprehensions had been expressed about the adverse impacts on people’s livelihoods, health and food security. These apprehensions have by and large turned about to be correct as is evident from the crisis situations faced in several lines of agriculture (and related activities like horticulture) as well as industry. In addition the adverse impact of TRIPS on the availability of reasonably priced essential medicines as well as the seeds rights of farmers has been noted. The broad-ranging adverse impacts of the wider reach and deeper penetration of multinational companies and banks in the form of the plunder of our natural resources and the greater vulnerability of the economy are also clear.

While there is a growing need for a proper assessment of all the adverse impacts of the WTO regime and renegotiations based on such an assessment, there is instead a contrary trend of going in for more and more bilateral free trade agreements without even first properly assessing and stabilising the impacts of the earlier changes in foreign trade. Several such free trade agreements have already been concluded with countries like Japan, South Korea, Malaysia and Singapore. Several other FTAs are being pursued with vigour. Among this the impact of the FTA with European Union (EU) could be the most far-reaching on food-security and livelihoods. The negotiations for this with the EU have already reached an advanced stage.

Whereas international trade agreements despite all their inequities at least have the principle of differential treatment for developing countries, FTAs are much less likely to recognise this. Any agreement between a developing and a developed country can therefore be even more unequal. This possibility increases all the more because in some important respects like tariff reduction and TRIPS some FTAs have shown the tendency to adopt WTO-plus measures. In other words, some important provisions of these agreements may be even more sweeping compared to what has been agreed to in the WTO regime.

In the case of imports, FTAs are likely to offer much steeper and broader reduction of tariffs. Hence the chances of cheaper imports harming the livelihoods of farmers can be higher. This is particularly true in the case of imports from the European Union where heavy farm subsidies are available. Cheap dairy imports, for example, can have a very adverse impact on small scale dairy farmers of India. Income from sale of milk is an important source of subsistence for many poor families.

Similarly cheap imports can threaten the survival of many micro, small and medium industries. In recent surveys nearly 71 per cent of these enterprises surveyed have reported a significant decline in sales as a result of higher imports. In addition reduction or abolition of exports tax as a result of FTAs can lead to a reduction in the availability of raw material for several small and medium industries, including food-processing industry.

As a result of the implementation of TRIPS-plus proposals the price of essential medicines can rise steeply and the availability of cheaper generic medicines can decline significantly. The seed rights of farmers can be significantly affected while the grip of multinational companies on agriculture can increase. The share of foreign companies in government purchases can increase and any obstacles in the path of rapid spread of multinational companies are likely to be dismantled. One of the impacts of FTAs is likely to be that POSCO-type large-scale onslaughts on natural resource base are likely to get more approvals.

In a series of papers on the many-sided impact of FTAs on medium and small enterprises including food processing industry, Third World Network, Shramik Bharati and Traidcraft have voiced a strong need for caution in protecting the interests of vulnerable groups at a time when there is a strong drift towards FTAs. These papers co-authored by Ranja Sengupta and Kumar Gautam also have valuable suggestions about how the interests of micro, small and medium enterprises can be protected.

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