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Vandana Shiva explains why the free trade of economic globalization is not fair trade.

Dr. Vandana Shiva

  When the French peasantry was reeling under a severe famine and Marie-Antoinette was told that they had no bread to eat, she nonchalantly said, "If there is no bread, let them eat cake."

When thousands of our farmers are committing suicide, when millions of our women and children are facing hunger and starvation, a leading economist said that, "The poor can buy Barbie dolls". This statement was made when I was on a T.V. panel with him to discuss and debate the impact of the removal of import restrictions (Quantitative Restrictions, or QRs).
We were discussing the disastrous impacts that a free flow of products into Indian markets has on small-scale producers and farmers. A video clip had been shown of the 100,000 lock makers in Aligarh whose units were being shut down as cheap locks from China were flooding our markets. Import of agricultural commodities like edible oils have already destabilised the agricultural economy and with 147 more agricultural items removed from the restricted list, other sectors will be hit.

The removal of QRs has been celebrated by the media in India as a consumer's bonanza. Samples of relevant headlines include: "Johnnie Walker, fine wines in 2 weeks", "The consumer bonanza", "The Indian consumer has finally been crowned king", "The brand India will be wearing: Overcoat-Dolce & Gabbana, Scarves-Hermes, Belt-Calvin Klein, Skirt-Margaretha Ley Escada, Pullover-Chloe, Diamond Necklace-Van Clef and Arpels".

The Elite Rejoice

The diamond-laden lady is not the typical Indian consumer. Most Indian consumers are already consuming less than their basic needs require as livelihoods are destroyed, incomes disappear and purchasing power evaporates. Cereal consumption has declined by 12% in rural India during a decade of reforms. As imports further destroy livelihoods, especially of the poor, their consumption levels will further fall. No one is addressing the declining consumption of the poor as imported goods drive out domestic production and livelihoods. And when the issue of survival of the poor was raised, our worthy economist stated seriously, "The poor can buy Barbie Dolls".
It is this mindset of elite India-blind to the growing hunger and destitution of the people of this country but enthralled by the junk that can now be imported-which is fooling the country about the reason and impact of lifting QRs. Among the unrestricted imports are carcasses of sheep and goats, offal (animal waste parts) of chicken, sheep, turkeys, ducks, geese, rabbits, hares, swine.

We have opened up our markets to meat imports when Europe is in crisis because of Mad Cow Disease and the Foot and Mouth Disease. More than 500,000 animals there are being killed and burned.
The U.S. Centres for Disease Control and Prevention (CDC) in Atlanta has calculated that nearly 81 million cases of food borne illnesses occur in the US every year. Deaths from food poisoning have more than quadrupled due to deregulation, rising from 2000 in 1984 to 9,000 in 1994. Most of these infections are caused by factory-farmed meat. CDC estimates there are nearly 20,000 cases of poisoning by the mutant E. Coli 0157.H7. This mutant bacterium was unknown before 1982 and contamination of meat by E. Coli 0157.H7 results from the sloppy high-speed slaughter and processing industry.

The US's so-called Hazard Analysis and Critical Control Point (HACCP) is in reality a Trojan Horse for deregulation which has resulted in removing 1400 food inspectors and leaving food safety in the hands of the factory farming industry which produces food hazards in its rush to slaughter more animals faster. A few high-speed slaughter operations have driven thousands of small packers out of business.

The US slaughters 93 million pigs, thirty seven million cattle, two million calves, six million horses, goats and sheep and eight billion chickens and turkeys yearly.
Now the giant US meat industry, including the disreputed meat giant Tyson, wants to dump contaminated meat produced through violent and cruel methods on India, a predominantly vegetarian society.

So, while fewer employees slaughter more animals, the worker turnover rate in high-speed plants is nearly 100 per cent per year according to the United Food and Commercial International Union. Workers in America's slaughterhouses call working in the meat industry worse than slavery.
The Indian Government's announcement that the Prevention of Food Adulteration Act will be used to ensure 'Biosecurity' under free import conditions is far from reassuring. PFA is an outmoded food law, designed before the age of Mad Cows, prions and GMOs. The Government has so far failed to pass a law drafted by the Social Welfare Ministry for labelling of vegetarian and non-vegetarian content in food items. It has not shown the will to protect public health or the citizens' right to know. It cannot guarantee food safety in the face of imports through the instruments it has offered. The 'Licence raj' has not ended. Our public health is being put in the hands of corrupt inspectors who will give licenses for the import of the most hazardous foodstuffs without blinking an eyelid. Art XX allows for bans on imports; this route should be used for agricultural products that carry risks for animal or human health.

The Government has also announced that it will import sensitive items through State Trading Agencies. However, soya oil and palm oil, which are already flooding our markets, are not on the list of restricted imports.

Further, while the bound rate for tariffs on edible oil imports is 300%, the Government has kept the tariff for soya oil low. This does not benefit the Indian farmer but the seed giant Monsanto and the grain giant Cargill. The announcement of a 'war room' might reassure some people. But such militaristic metaphors can only emerge if one sees economics and trade as war.

Tragically, India's export-import (EXIM) policy has declared a war against the hardworking people of India, but the 'war room' will fail to see the victims of this war, as millions are pushed into hunger and destitution. The problem with the free trade logic is that it puts trade above people's lives and shifts government focus from the welfare of people to the promotion of exports and imports. The EXIM policy makes this singular focus-that neglects people but protects trade-very evident. The economy of a billion people is being destroyed for the sake of a pathetic target, wherein India's exports by 2005 would account for 1% of global trade.

In any case, the rush to remove QRs is not justified. India's trading partners had accepted the deadline of 2003. Only the U.S. had called for removal of QRs by 2001. In Oct 1997, the U.S. initiated action at the WTO Dispute Settlement Body ('DSB') to establish a panel to examine this dispute. In its request, the United States considered that quantitative restrictions maintained by India, including but not limited to, more than 2,700 agricultural and industrial items, appeared to be inconsistent with India's obligations under GATT. Furthermore, its contention was that the import licensing procedures and practices of the Government of India were inconsistent with fundamental WTO requirements.

The DSB established the Panel on 18 November 1997, with the following terms of reference:
"To examine in light of the relevant provisions of the covered agreements cited by the United States, the matter referred to the DSB by the United States in the document and to make such findings as will assist the DSB in making the recommendations or in giving the rulings provided for in those agreements."

In other words, the US demanded a much shorter phase-out period for the removal of Quantitative Restrictions.

Arguing for Livelihood

In April 1999, the WTO Panel ruled in favour of the US. The Panel chose to only take into account the IMF position that India's balance-of-payments situation was not such as to allow maintenance of measures such as QRs for BOP purposes and therefore India was not justified in maintaining its existing measures on the pretext of BOP problems.

The Government of India at this stage did not raise any arguments by way of exerting its rights as a founding member of the WTO, premised on the probable recurrence of BOP problems due to increase in imports.

The Panel asked the parties to negotiate a new implementation phase-out period. The Panel also recommended that DSB ask India to bring the measures at issue into conformity with its obligations under the WTO Agreement.

In May 1999, India notified the DSB of its decision to appeal against certain issues of law in the Panel Report and filed a notice of Appeal with the WTO Appellate Body. In August 1999, the Appellate Body rejected India's appeal. In September 1999, the Indian Government indicated to the US that it required more than the normal 15-month period to remove QRs. However, the latter did not agree to this time schedule, though all other trading partners did.

In December 1999, two trade bureaucrats, Susan Esserman of the US Commerce Department and N.N. Khanna of the Indian Ministry of Commerce, agreed in effect that:

a) on or before April 1, 2000 India may notify to the United States a listing of up to but no more than 715 items of the 1,429 items on which India currently maintains quantitative restrictions, and with respect to the up-to-715 items so notified, the reasonable period of time shall expire on April 1, 2001 and,

b) with respect in all the other items, the reasonable period of time shall expire on April 1, 2000.
This agreement in effect drastically shortened the phase-out period to 2001 by which date all QRs on 1,429 items would be lifted. This is despite the fact that the European Union and other countries had agreed to a phasing out of import restrictions by March 2003. But the Indian Government, bowing to US pressure, advanced the lifting of QRs by three years.

However, the US is itself violating international obligations such as backing off the Kyoto Protocol to regulate CO2 emissions though it is the biggest polluter. Responsibility is a two-way lane. And the lack of responsibility being shown by the U.S. in respecting international commitments should have been used by India to gain space in setting policy that ensures her people's survival. In any case, India is arguing for maintaining QRs in the review of the Agreement on Agriculture. It should have maintained QRs as a right.

It is also arguing for a livelihood and food security exemption from the rules of the Agreement on Agriculture. Instead of defending the livelihoods and food security of the country, the Commerce Minister has threatened the survival of the Indian people, especially the farmers, twice over: firstly, through removing restrictions on imports and secondly by announcing an agribusiness centered export oriented policy for agriculture. This 'farm-to-port' export policy is a recipe for corporatisation of Indian agriculture. It will undermine our food security. Farmers lose markets by imports of artificially cheap products due to removal of QRs. They will lose their land, their water, their homes as corporations take over Indian agriculture to grow flowers and vegetables and fruits and shrimps for exports, with state support.

The Commerce Minister has through his EXIM policy committed India's markets, soil and water as public subsidies to global corporations.

Barbie dolls might flood supermarket shelves soon, but how will the poor be fed if they have no livelihoods? How will farmers survive when both markets and resources have been snatched away from them?


Vandana Shiva is a physicist and philosopher of science. Her publications include Women, Ecology and Development and Monocultures of the Mind. She is the director of the Research Foundation for Science, Technology and Natural Resource Policy, A-60 Hauz Khas, New Delhi 110016, India; e-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.


This article was published in New Renaissance magazine Vol.10 No.4