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RCEP treaty worries Indian farmers

How the trade liberalisation agreement will impact Indian economy

Representational Image | Reuters

The Regional Comprehensive Economic Partnership treaty, a mega trade agreement among 16 Asia Pacific countries, has rattled farmers who are seeing red. 

Manjit Singh Gill of Ropar district believes that it will become the biggest reason for  farmer suicides. "Rural indebtedness will rise, our earnings will become zero", he says.

If the zero tariff trade agreement fructifies, most of the economy will be impacted, possibly adversely.

As he headed for Thailand on Saturday, Prime Minister Narendra Modi has assured the nation that the interests of the Indian economy will be safeguarded. 

At the heart of the RCEP is the idea of lowering trade tariffs. Imagine a scenario where milk or milk products are allowed into India without any import duties. The price of milk could drop to less than half of the Rs 50 or so a litre one now pays. The price of some pulses could crash similarly. So, too, could the price of—say silks or steel or medicines. Imagine the joy of consumers buying these. But also imagine the agony of the Indian dairy keepers and farmers selling milk or growing pulses, the home grown steel industry and the Indian pharma sector.

During  the negotiations in November last, the partner countries abandoned the idea of reaching a basic agreement that year, and scheduled it for end 2019—a few weeks to go. Analysts then believed it was because of impending elections in three countries, including India. The RCEP framework is all about providing for zero duty on 92 per cent of tradable goods. Another five per cent are expected to be added over time, implying that 97 per cent of goods that are now traded will become zero duty. So, it will not be just about milk and medicines, but many other things. 

The RCEP is a trade liberalisation agreement among 10 Asian countries and their six FTA partners that include Japan, South Korea, China, Australia, New Zealand and India. It has the power of being converted into 45 per cent of the global population, account for 25 per cent of the global GDP and 40 per cent of global trade, thus becoming the world's biggest trade block. And the Indian market size is one big temptation for the entire world. 

While the ruling party and the government may be gung-ho with the possibility of bringing down prices for the great Indian middle class and bridge the country's   over 100  billion dollars trade deficit with the RCEP countries, it may end up upsetting many sections of the Indian public. The farmers have protested three times against the adverse impact possibility of the RCEP Free Trade Agreement,  and urged that even if the agreement is signed agriculture be exempted. Almost every other sector that has the potential to create jobs is also against the RCEP FTA. Now is the wrong time for such liberalisation, according to farmers' organisations, because the agrarian crisis refuses to get solved, and the manufacturing sector is in doldrums; together they are pulling down growth.

Food policy analyst Devinder Sharma says dairy farming and farm interests will get seriously compromised if the RCEP deal gets done. But what is seriously at stake is India's food sovereignty. “Coupled with WTO pressure to restrict MSP payments for buffer stocks, this will destroy not only farm livelihoods but also our food self sufficiency.  Importing food is like importing unemployment. And our food security has been built up over years of hard work,” he says.

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