WTO: Neocolonisation and Corporate Takeover
by 09.09.2006 00:00-
WTO - An Instrument of Neocolonisation and Corporate Takeover
Food, Clothing and Shelter (Roti, Kapda aur Makaan)
Roti, Kapda aur Makaan (Food, Clothing and Shelter) Symbolizes the basic needs of the people. We have used these three basic needs as a lens to assess the impact of ten years of WTO on people’s lives and livelihoods. World Trade Organisation (WTO) has provided a powerful forum for developed countries to erode the economic sovereignty of the Third World Countries including ours. Our market has been forced to open for goods and services of the multinationals particularly holders of the monopoly rights in intellectual property.
Trade liberalization is ruining the small and cottage industries and endangering the livelihood of the vast masses engaged in eking out existence in the self-employed sector of economy. The industries are facing stiff import competition and the brunt is being borne by the workers, facing not only deprivation of their hard earned rights and entitlements, but also retrenchment and lay-offs.
Worst of all, agriculture, the last bastion of the national economy is facing unprecedented threat with the removal of all quantitative restrictions (QRs) on imports of agricultural produce, on the one hand and impending corporatisation of this sector, on the other. The damage has been compounded because of the complementary economic, financial and fiscal policies being followed by the government on advice of IMF and World Bank. Farmers have been left at the mercy of the agri-business and profiteers. They are being dispossessed of their land through auctions to recover the dues. Public Distribution System has been decimated in the name of ‘targeting’ subsidies and fiscal discipline. Rural, urban poor and adivasi are the worst victims of the policies of globalisation and marketisation.
As part of economic liberalization, forest and mineral resources are being brought under full sway of the market. Multinationals are being invited to export these resources. The traditional and Constitutional rights of adivasis to land and forest resources are being ignored, curtailed or abrogated. And the very survival of adivasis is at stake. The enormous economic, political and social implications of this emerging reality can not wished away by statistical or economic jugglery.
WTO therefore does not represent market liberalization as claimed but one-sided market access. The global corporations largely located in western countries and backed by their governments, are getting access to the domestic economies of all countries. WTO is therefore neither about liberalization of international trade nor it is about globalization. It is about opening Third World markets to advanced countries.
WTO’s Agreement on Agriculture (AoA) paradigm favours capital-intensive, large scale, trade-oriented, and corporate agribusiness-driven agriculture, and is insensitive to the needs of the vast masses of small and marginal peasantry and subsistence agriculture in developing countries. This paradigm threatens the livelihood of three billion strong peasantry in the Third World.
One of the cruelest hoaxes played on the developing countries was the Agreement on Agriculture. The promise held out was that, as a result of the agreement, the support provided by developed countries to their agriculture will be reduced, the prices of agricultural produce in the world markets will rise and thus developing countries will not only have expanded market access but would receive higher prices for their agricultural exports. Highly exaggerated estimates of likely gains to developing countries were publicized. In fact what happened was quite the contrary.
The total quantum of subsidies and support actually provided by developed countries to their agriculture has risen significantly. Current estimates indicate that such support in the developed countries has reached an annual level of $350 billion as against $276 billion before 1994. In the Uruguay round, the EU and the US, managed to protect their huge agricultural subsidies under "Green" and "Blue" boxes, for which there were no reduction commitments. They accepted that only trade-distorting ("amber box") subsidies and export subsidies would be reduced and even this commitment was not substantial and left loopholes for escape. Today its is clear that both blue box and green box subsidies are indeed trade-distorting and need to be reduced substantially if the developing countries are to have access to the markets of the developed countries.
The increase in global agricultural imports was more than exports during post WTO period. The growth of agricultural imports was 152 per cent during the post WTO period as compared to 90.7 per cent in case of agro exports. The index of agricultural imports on base 1994-95 increased to 152 per cent in 2003-04. On an average per annum during post WTO period (1995-2004), the index of India’s agricultural imports increased by 62.2 per cent. The aggregate trade balance has deteriorated very sharply and in the current year it is estimated to cross $ 30 billion.
It is clear that liberalization under WTO has rather increased India’s global agricultural imports instead of exports. Indian agricultural sector has been adversely affected during post WTO regime. The aggregate trade balance has deteriorated very sharply, and in the current year it is estimated to cross $30 billion. (These increase in import values is usually blamed on oil prices, however, non-oil imports have increased at an even more rapid rate).
The process of global integration and the effects of the WTO agreements were expected to cause increases in India’s exports of agricultural goods, textiles and garments, leather and gems and jewellery. However, all of these categories have actually declined in share of exports. Instead, chemicals and engineering goods showed substantial increases in export shares. Since the inception of WTO, there is a steep decline in the prices of agriculture commodities internationally, from 1980 to 2000, world prices for 18 major export commodities fell by 25% in real terms during this period the decline was steep for cotton (47%), coffee (64%), rice (61%), cocoa (71) and sugar (77%). For example international cotton prices came down from 128 cents per pound in 1981 to 38.7 cents per pound in 2002. Similarly rice prices came down from 565 US$/tonne in 1981 to 160.8 US$/tonne in 2002 and sugar prices came down from 18.11 US cents per pound in 1981 to 5.68 US cents per pound in 2002.
Food imports have risen sharply in the poorest countries. Philippines, which was food surplus till 1994, and also China, which was a food surplus economy as recently as 2003, have now become net food importers. Bangladesh and Pakistan too, have become food deficit countries.
Asia is the home of 65% of the world’s food insecure - over 510 million people around the region. The number of hungry people have increased in most Asian countries since 1990s, with the exception of China, Vietnam and Thailand. At the turn of the century, even South Korea and Malaysia saw their number of undernourished stagnate or rise. The UNDP report noted between 1990 and 1995, India made significant gains, reducing the total number of hungry by 13 million, but in the second half of 1990s, despite economic growth, the number of hungry increased by 18 million. Indeed, South Asia has one of the highest proportions of the undernourished - 22% - second only to sub-Saharan Africa. The report is an eye-opener for policymakers, who want to rush in the process of "economic liberalisation", and open up for imports in the name of integration with the global economy. While the government dismantles procurement and public food distribution system (PDS) because they are considered subsidies to the people of the country, and are supposed to distort trade, it allows traders to buy bulk grain from the mandis. An average about 945 out of 1000 person get two square a meal in a year. Orissa is reported to have minimum number of people receiving two squares a meal through out the year.
It may come as a surprise for many of us that an estimate 53% of all Indian children suffer from chronic malnutrition. The figure for impoverished Bangladesh is 45% for strife torn Rwanda 43% for Bhutan 40% and for civil war ravaged Congo 45%. The figure for underweight under five in India, Bangladesh, Pakistan and Nepal are 47%, 48%, 38% and 47% respectively. The average for Sub-Saharan Africa is 30%. 76% children in Maharashtra suffer from slandered growth and are anaemic; In Bihar 54% children are malnourished, in Orissa 54% and in MP 55%. The average for sub-Saharan countriesis less than 51%.
The Government’s National Agriculture Policy (2002) envisages that "private sector participation will be promoted through contract farming and land leasing arrangements to allow accelerated technology transfer, capital inflow and assured market for crop production, especially of oilseeds, cotton and horticultural crops." But studies show that contract farming has failed every where. Our study in Punjab shows when the private firms breached their own agreed contracts and cheated the farmers, no one from the government was there to hold their hand. Consequently, contract farming worked to the disadvantage of the farmers. The changes driven by trade liberalization benefit MNC’s but remove protections from exploitation for farmers. The changes are a combination of more freedom for MNCs operations and more centralized control over indigenous, domestic trade and marketing by state bureaucracies. The changes replace democratic structures by state structures, which then create rules that favour MNCs and displace local traders while also leaving MNCs free to exploit small farmers.
Local traders have to pay up to Rs.2 for every hundred rupees of the price as market fees. There is however no market fees for agribusiness buying in private yards. This unequal taxation was granted to the East India Company through the ‘Farukhsheer Firman’ of 1716, called the Free Trade Treaty of that period which destroyed local trade and local manufacture. Reforms of today as reflected in the "Reform" of the Agricultural Marketing Laws, inbuilt in inequality - freedom from regulations and taxes for MNCs.
Traders and large Corporations have taken the advantage by quickly occupying the space vacated by the government. Reports from Punjab, Haryana, U.P. and Madhya Pradesh indicate that FCI and State government agencies have stepped back from procurement operations and large private and multinational companies, among them Cargill, the biggest global grain traders, Continental, ITC and Hindustan Lever, have bought significant quantities of wheat. There have also been reports that the Australian Wheat Board also made purchases. In Khanna (Punjab) which has the country’s largest grain mandi farmers reportedly sold wheat directly to the food processing conglomerates. Wheat procurement so far has been only 90.1 lakh tonnes compared to 137.4 lakh tonnes procured during the corresponding period last year.
The highly subsidized duty-free imported wheat will create a temporary glut in the domestic wheat market and farmers will again be forced to sell out their produce at rates lower than the production cost. This is a tried and trusted trick of agri-multinationals to throw domestic producers out of business.
The decision of the government to import wheat raises many questions about the real motives behind the unfortunate move. It is difficult to believe that this decision has been taken without any pressure or influence from grain multinationals. The second decision signals the end of an era of self reliant food security and beginning the "ship to mouth" variety of food security regime. Imported wheat will hit the domestic wheat growers very hard. Similarly, despite being the world’s largest producer with a 25 per cent share and main consumer of pulses, India has allowed the humble lentil to go out of reach of the common man.
Even before the WTO mandate began to be asserted, the government has been trying with the idea of opening the vast Indian market for unrestricted imports of skimmed milk powder and milk products. Following the government’s economic policy of liberalization, milk powder, which used to be on the restricted list for imports, was put on the open general license in 1995-96. The open door policy to MNCs has only placed the national milk grid in jeopardy. U.S and E.U will continue to flood and dump their highly subsidized milk and milk products into the unsuspecting developing countries like India, which have little safeguard mechanism to protect their small dairy products. The export subsidies provided by EU member constitute over 50 percent of the export price earned by them for butter and butter oil and over 20 percent in the case of skim milk powder.
The average farm size is 1.5 hectare in a developing country. In India about 58% farmers have land holding below 1 hectare. Developed countries have corporate land holding of hundreds of hectares. How can farmers who earn less than a dollar compare with those in OECD countries receiving $ one billion a day as subsidy.
In the case of sugar there is no relief to the consumers, the sugar trade is in the grip of the mills. The boom in sugar prices came after the Centre decided to de-license and de-control the sugar industry. The recent liberal sugar import would not reduce the misery of consumers.
Globalisation has also badly affected the plantation sector particularly in states lik Kerala. Before the fall of the prices of primary commodities in 1997 driven by the global recession, hit hard the farmers in Kerala, the State in terms of the social sector, stood different from other States. It was widely believed that the Kerala economy would not be adversely affected by the new policy regime as the State would gain immensely from the ongoing process of market integration. A brief upsurge in the prices of primary commodity during the first half of the 1990s, seems to have confirmed the initial euphoria. The cropping which evolved and developed in Kerala was purposefully tailor-made to the demands of the world market. The price crash and the spate of suicides since the half of the 1990s has been the logical corollary inevitable for opening up to import dumping on any local economy, which is heavily dependent on world market.
There are deep differences in the position and attitudes of developed and developing countries to the protection of intellectual property by legislation. TRIPs is the international treaty for protecting international property. It is however based on a highly restricted concept of innovation. By definition, it is weighted in favour of transnational corporations and weighted against citizens in general, and Third World peasants and forest dwellers in particular. Further, TRIPs is weighted against basic needs and survival and in favour of trade.
The dubious intrusion of multinational seed giants, corporatisation of seed trade and the collusive role of the power, all seem to be a part of larger game plan only to destroy and dismantle public seed production, creates various disincentives for the farmers to grow, preserve and exchange seeds but facilitate access to and control of the Indian seed market by multinational seed companies. Globalization does not mean self-destruction. Policies which, force our farmers into a situation where they are made to depend on MNCs for seeds will be disastrous to Indian agriculture.
The Seed Act of 2004 will create a ‘Seed Police’ to terrorize farmers who are conserving biodiversity and practicing a sovereign self-reliant agriculture. The seed exchange and barter of unregistered thousands of farmer’s seed varieties has a fine of up to Rs. 25000. The 2004 Seed Act has nothing positive to offer to farmers of India but offer a promise of monopoly to private seed industries, which has already pushed thorusands of our farmers to suicide through dependency and debt, caused by unreliable, high dependency and non-renewable seeds.
Of late, the retail industry in India has often been hailed as one of the sunrise sectors in the economy. AT Kearney, the well known international management consultancy, recently identified India as the ‘second most attractive retail destination’ globally from among 30 emergent markets. It has made India the cause of a good deal of excitement and the cynosure of many foreign eyes. With a contribution of 14 per cent to the national GDP and employing 7 percent of the total workforce (only agriculture employs more) in the country, the retail industry is definitely one of the pillars of the Indian economy.
Wal-Mart is waiting to take over India’s retail. In fact, in the context of the agrarian crisis caused by WTO driven trade liberalization, retail offers the employment of last resource. Wal- Mart is the biggest player in retail. If Wal-Mart and other retail chains get a foothold in India, it will mean displacement of small retailers and farmers.
Reliance Retail (RR), a hundred percent subsidiary of Reliance India Limited (RIL) wants to build a chain of both small and super size stores across India reaching $ 25 billion sales by 2011. If plan succeeds, Reliance will become the Wal-Mart in India.
Globalisation has also had resulted in the permanent reduction in the standard of living among unemployed weavers, retrenched workers in places like Mirzapur, Bhadhoi and Banaras. In many instances, in order to cope with the impact of unemployment, house holds have reverted to such practices as reducing food consumption, decreasing expenses on health care and education, all of which amount to irreversible losses. In many cases, children have been forced to withdraw from school because parents have no income.
The decline in handlooms has seen a crisis in weaving like the agrarian crisis. Weavers in Andhra Pradesh, like farmers, are committing suicide because of economic distress as the market for their products shrinks under the pressure of globalization, and the dumping of cheap factory made textiles, especially from China. In the post MFA era, contrary to the expectations India’s textile and readymade garment exports have shown a marked decline since the abolition of the quota system. Baring the American and Middle East regions, India’s textile exports have recorded negative growth rates everywhere. Even the garments sector, the share of USA declined from 33% to 30% during 2000-01 to 2004-05. The textile sector now has to face more competition from other textile producing countries like China, which remains the benchmark and a big threat.
China may drive other developing nations like India out of the market. Often, prices are cut in such a proportion that competitors cannot possibly cope with the pressure. China’s prices declined over the years, falling from an average of $6.23 per square metre in 2001 to $3.12 per square metre in 2004 to $2.58 per square metre in September 2005. it is observed that China’s exports of some apparel products worldwide are at average more than 50% below those of other countries. In some categories of imports into the European Union, China’s prices are 30-35% lower than worldwide prices. As a consequence, China has gained extremely large market shares against which India can not compete.
There will be several barriers like protectionism, anti-dumping measures, environmental issues, labour rights, child labour issues etc. - all puts brakes on export from India. Globalization encourages contractualization and informalization of production and economy leading to serve exploitation of the workers. The textiles and clothing industry is one of the worst affected in this respect. There is all round violation of workers right. There are high levels of casual employment, long working hours, no employment security, very low levels of wages, lack of any social security, and more exploitation of women workers.
Today, virtually every large business house - the Tatas, Reliance, Mahindra & Mahindra, Wipro - is setting up Special Economic Zones (SEZs) in India. Many promoters of SEZs are just builder lobbies, grabbing large part of the fertile agriculture land that they are getting at below market rates, from eager state governments hoping that the new zones will help the economy. There has also been huge pressure from industrialists, large exporters, and even state governments to offer the best deal possible. This is leading to a land grab, where promoters are more interested in the land and the tax benefits they get.
SEZs are just a front for a real estate scam made more juicy by enormous tax arbitrage opportunities. In many states, farmers are being asked to surrender their lands at Rs 300 per square yard. "Once these lands come to developers, their prices begin to rise exponentially. The SEZ Act grants developers authority to plan new projects with more freedom than even China allows in its own bustling SEZs, on which Ambanis new cities are modeled Reliance has all but secured 150 kilometers of largely farm land east of Mumbai at prices which is at 1/1000th those in down town Mumbai. The government holds some equity in the projects, but as a largely, silent partner, and has already approved Reliance detail plan.
SEZ is a specifically delineated duty free enclave and shall be deemed to be foreign territory for the purpose of trade operations, duties and tariffs. These units can have 100% foreign direct investment (FDI) in the manufacturing. According to an internal assessment of the Union Finance Ministry, the government had to forgo about Rs. 90,000 crores in direct and indirect taxes over the next four years on account of the SEZs.
While Reliance is in the process to grab more than 50,000 hectares of the prime agriculture land in the name of SEZ or power plants, MNCs and corporates are busy in stealing the tribal land for steel and minerals in Orissa, Jharkhand and Chhatisgarh. This land grab is the biggest subsidy given to corporations and it is the subsidy created by robbing the poor of their last asset - their land.
Executive Summary v
Introduction: Ten Years of WTO 1
1. Roti (Food): WTO and the Undermining of Food Sovereignty 7
(a) Destruction of India’s Food Security and Dismantling of PDS 22
(b) Corporate Hijack of Domestic Markets 32
(i) Contract Farming 32
(ii) Change in APMC Act 47
(c) Creation of Import Dependency and Destruction of Lives and Livelihoods 53
(i) Wheat: Importing Wheat, Importing Food Insecurity 53
(ii) Pulses: Out of the Reach of Common Man 64
(iii) Dairy Sector: Destroying the World’s Biggest Livestock Economy 67
(iv) Sugar Industry: Bitter Sweet 79
(v) Plantation Sector and the Farmers Suicides 89
(vi) TRIPs, Creation of Seed Monopolies and Government Seed Policy 95
(vii) Corporate Hijack of Retail 110
2. Kapda (Clothing): Destruction of the Textile Sector 118
(i) Process of Globalisation : Collapse of Indian Carpet, Silk and Handloom Sector 118
(ii) Scenario of Post MFA: Threat to Textiles & Clothing 126
3. Makaan (Shelter): Land Grab and Uprooting Rural India 139
(i) Special Economic Zones or Land Scam 139(ii) Stealing Tribal Land for Steel 145
(iii) Corporate Take over of Forest Land 146
(iv) Reliance Energy: Urja Nagar or Ujar Nagar 147
The State of India's Biodiversity
India is one of the world’s richest countries in terms of its vast array of biological diversity. The Western Ghats and North East India is recognised as an international biodiversity hotspot. It has been estimated that over 81,000 species of fauna and 47,000 species of flora are found in this country so far. Of the estimated 47,000 plant species, about 15,000 flowering species are endemic to India. The relationship between local communities and the biological diversity in India is a very intricate one, whereby two-thirds of our population are heavily dependent upon the biodiversity for their survival. The destruction of biodiversity signifies the destruction of people’s livelihoods and survival.
At present, around the world, at least three species a day are being depleted, or 1,200 species every 400 days. At the current rates of extinction, a quarter of the world’s known and identified species (over 400,000) will have vanished by the end of this century – that’s only three years away.
Among the larger animals in India, 79 species of mammals, 44 of birds, 15 of reptiles, and three of amphibians are threatened. Nearly 1500 plant species are considered endangered. Flowering plants and vertebrate animals have recently become extinct at a rate estimated at 50 to 100 times the average expected natural rate. The loss of even one species causes changes that are complex, unpredictable and incomprehensible.
Source: FAO, 1996
According to the FAO, replacement of local varieties forms the largest contribution to biodiversity erosion. Replacement of local varieties by a select number of high yielding hybrid varieties (mono-cropping) has been vigorously promoted under the Green Revolution during the 1960s in order to increase production of food crops. In India, monocropping has resulted in the vast depletion of indigenous species of flora and fauna. Despite being challenged by eminent scientists around the world, the Green Revolution’s tenets continue to influence agriculture in the developing countries today.
Most Indians live in a biodiversity based economy. Therefore, biodiversity and indigenous knowledge are central to the economic security and subsequently, the national security of our country.
Biopiracy refers to the process by which the rights of indigenous cultures to these resources and knowledge are erased and replaced by monopoly rights for those who have exploited indigenous knowledge and biodiversity.
Biopiracy is occurring through the claiming of IPRs by TNCs, who are making billions of dollars by usurping our traditional knowledge systems and genetic resources from the domain of the commons.
IPRs regimes only recognise and provide protection to formal innovators, not to indigenous informal innovators. Therefore, traditional knowledge evolved and utilised by informal innovators is being pirated by formal innovators, who perform mere translations and minor modifications and then seek patents, claiming the knowledge as well as life forms as their private property.
Most biodiversity related intellectual property rights are either the enclosure of non-western traditions of science (for example; neem, turmeric, and phyllanthus niruri) or the enclosure of the intellectual commons of contemporary western traditions of science.
Biopiracy through IPRs has arisen as a result of the devaluation and invisibility of indigenous knowledge systems and the lack of existing protection of these systems.
The protection of indigenous knowledge systems as systems of innovation and the prevention of piracy of biodiversity requires a widening of legal regimes beyond the existing IPR regimes such as patents.
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