India's refusal to dilute its food subsidy correct : Economic Times
India's refusal to dilute its food subsidy and stocking policies threaten to derail progress on multilateral trade as envisaged under World Trade Organization (WTO) rules. Or that is what the West would want the world to believe.
The truth, however, is more nuanced and has to do with overwhelming national priorities, not so-called free trade. "Free trade" is a term used opportunistically when developed countries want other nations to open up markets for their products and services.
Yet, economic historians know that both Britain and the US favoured protectionist policies to foster economic growth during their development phases. Abraham Lincoln favoured a 44 per cent tariff during the American civil war to starve the more prosperous south of industrial products and build railways in the north. And Franklin Roosevelt would go on to blame protectionism under his predecessor as one of the causal factors of the Great Depression. India's main priority is to buy food at support prices from farmers, more than 50 per cent of the population, stock it and supply it to the poor at low prices.
Yet, WTO rules say that these subsidies cannot cross 10 per cent of the value of food output. This is utter rubbish, because the pricing is calculated at rates set in 1986-88, which artificially lower the food subsidy ceiling. India cannot agree to such terms.
When Europe and the US ask India to cut subsidies and tariffs in food and agriculture markets, we should ask why they persist with high tariff and non-tariff barriers to protect their farm sector, which is also heavily subsidised. India's stand on trade talks is correct and justified by our national priorities. Developed countries have to open up their markets to freer movement of goods, workers and services from developing ones. Pressure to cut food subsidies in India has to be matched by opening up of food and farm markets in the West.
In any case, this story is not over as yet. India is willing to go back to the negotiating table in September when the WTO reopens, and if other nations agree to postpone curbs on India's food subsidies, talks can progress.
India's refusal to dilute its food subsidy and stocking policies threaten to derail progress on multilateral trade as envisaged under World Trade Organization (WTO) rules. Or that is what the West would want the world to believe.
The truth, however, is more nuanced and has to do with overwhelming national priorities, not so-called free trade. "Free trade" is a term used opportunistically when developed countries want other nations to open up markets for their products and services.
Yet, economic historians know that both Britain and the US favoured protectionist policies to foster economic growth during their development phases. Abraham Lincoln favoured a 44 per cent tariff during the American civil war to starve the more prosperous south of industrial products and build railways in the north. And Franklin Roosevelt would go on to blame protectionism under his predecessor as one of the causal factors of the Great Depression. India's main priority is to buy food at support prices from farmers, more than 50 per cent of the population, stock it and supply it to the poor at low prices.
Yet, WTO rules say that these subsidies cannot cross 10 per cent of the value of food output. This is utter rubbish, because the pricing is calculated at rates set in 1986-88, which artificially lower the food subsidy ceiling. India cannot agree to such terms.
When Europe and the US ask India to cut subsidies and tariffs in food and agriculture markets, we should ask why they persist with high tariff and non-tariff barriers to protect their farm sector, which is also heavily subsidised. India's stand on trade talks is correct and justified by our national priorities. Developed countries have to open up their markets to freer movement of goods, workers and services from developing ones. Pressure to cut food subsidies in India has to be matched by opening up of food and farm markets in the West.
In any case, this story is not over as yet. India is willing to go back to the negotiating table in September when the WTO reopens, and if other nations agree to postpone curbs on India's food subsidies, talks can progress.
support
prices from farmers, more than 50 per cent of the population, stock it
and supply it to the poor at low prices. Yet, WTO rules say that these
subsidies cannot cross 10 per cent of the value of food output.
This is utter rubbish, because the pricing is calculated at rates set in 1986-88, which artificially lower the food subsidy ceiling. India cannot agree to such terms. When Europe and the US ask India to cut subsidies and tariffs in food and agriculture markets, we should ask ..
This is utter rubbish, because the pricing is calculated at rates set in 1986-88, which artificially lower the food subsidy ceiling. India cannot agree to such terms. When Europe and the US ask India to cut subsidies and tariffs in food and agriculture markets, we should ask ..
India's
refusal to dilute its food subsidy and stocking policies threaten to
derail progress on multilateral trade as envisaged under World Trade
Organization (WTO) rules. Or that is what the West would want the world
to believe.
The truth, however, is more nuanced and has to do with overwhelming national priorities, not so-called free trade. "Free trade" is a term used opportunistically when developed countries want other nations to open up markets for their products and ..
The truth, however, is more nuanced and has to do with overwhelming national priorities, not so-called free trade. "Free trade" is a term used opportunistically when developed countries want other nations to open up markets for their products and ..
India's refusal to dilute its food subsidy correct
India's refusal to dilute its food subsidy correct
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http://economictimes.indiatimes.com/articleshow/39572587.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
India's refusal to dilute its food subsidy correct
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