Kerala fights clock in ASEAN free-trade deal
By Ranjit Devraj
NEW DELHI - Southern Kerala state is known for the lush expanses of cardamom,
pepper, tea and rubber that grow on its misty hills, and the bountiful catches
of fish on a coastline punctuated by lagoons and backwaters. But a cloud in the
form of a a free trade deal with the Association of Southeast Asian Nations
(ASEAN) bloc hovers over this picture of plenty.
With the Indo-ASEAN Free Trade Agreement (FTA) now slated to become operative
in January 2010, agricultural experts, fishermen's representatives, trade union
leaders and Kerala's Marxist Chief Minister VS Achuthanandan have been at pains
to convince the pro-reform central government of Prime Minister
Manmohan Singh that the deal should be postponed or even scuttled.
India is a dialogue partner at ASEAN - which comprises Brunei, Cambodia,
Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and
Vietnam. ASEAN already has FTAs with three other dialogue partners - China,
Japan and South Korea.
"The center has bypassed its constitutional duty to take Kerala and other
states into its confidence before deciding to go ahead with this deal,"
Achuthanandan told Inter Press Service (IPS) soon after a meeting with Singh in
the national capital last week to discuss the issue. "We are yet to see a copy
of the proposed pact which, if signed, will undoubtedly affect the fisheries
and plantation sectors."
It does not help that Kerala - a state of 32 million people, with high human
development indices - is ruled by the Communist Party of India - Marxist
(CPI-M), which is bitterly opposed to the pro-liberalization polices of Singh's
Congress party-led government.
Supporters of the deal within the central government argue that Indo-ASEAN
trade is an unstoppable process that has seen a rise to US$39.4 billion last
year from $6.93 billion between 2000 and 2008.
The FTA, these supporters say, will see a phased reduction in tariffs to zero
on more than 4,000 goods, out of the 5,000 that are currently under trade.
There would also be a negative list to protect certain items until a level
playing field is achieved.
"A free trade agreement with the ASEAN is an international political commitment
and is also part of the 'Look-East' policy," Singh reportedly told his cabinet
colleagues when the issue came up for discussion last week. He pointed to the
fact that Australia, China, Japan, New Zealand and South Korea have already
signed FTAs with ASEAN and said India could not be seen to be lagging behind.
According to a cabinet minister who attended the discussions, India would -
through the FTA - gain access to machinery, steel products, chemicals and
synthetic textiles and win business opportunities in ASEAN countries including
in a more open services sector.
The central government's logic is that ASEAN, with 600 million people, against
India's billion plus, presents a substantial opportunity for Indian exporters
and businessmen.
There is a new emphasis in international trade on bilateral and regional
agreements as multilateral trade agreements under the World Trade Organization
have hit an impasse in the Doha round of discussion. There is also a need for
India to improve productivity and quality as it gradually integrates into the
global market.
"Such arguments are all very well but the ground realities are very different,"
says Thomas Verghese, a distinguished agricultural scientist and chairman of
the Kerala State Prices Board. "There are huge differences in productivity,
labor costs and inputs in the participating countries which cannot be easily
bridged."
Speaking with IPS by telephone from Thiruvananthapuram, Kerala's capital,
Verghese said that while the productivity of pepper is 380 kilograms per
hectare in India it is 1,000 kilograms per hectare in Vietnam and 3,000
kilograms per hectare in Indonesia. "If this FTA goes through, pepper may cease
to be produced in Kerala, the land where it originated."
Verghese said that even within India there existed issues that were specific to
Kerala - such as the relatively high labor wages at $6 per day, or the special
importance of crops such as coconut for the local economy and for food
security.
"Kerala's farmers already have the bitter experience of past free trade
agreements, such as the South Asia Free Trade Agreement signed in 2006, which
saw the state flooded with cheap Sri Lankan coconuts. Also the import of cheap
palm oil from Malaysia and Indonesia has seriously affected coconut
cultivation," Verghese said.
According to Verghese, Kerala's four million coconut farmers stand to be truly
ruined by the Indo-ASEAN FTA because it will allow the import of coconut oil
from the Philippines - a major producer which enjoys significantly lower costs
of production.
But, Verghese said the sector that is going to be hit worst is fisheries -
particularly artisanal fishing, which will be unable to compete with the
factory fishing carried out by such countries as Thailand. "Some two million
fishermen and their families are at risk in Kerala alone," he said.
Sensing the danger, the National Fish Workers Forum and the Kerala Free Fish
Workers Federation (KSMTF) are leading a nation-wide programme of agitation
aimed at halting the trade deal with ASEAN.
"Cheap imports of fish will threaten the livelihood of fish workers. The pact
will enable the dumping of 177 species of fish in the Indian market," said
KSMTF president T Peter. "We are confident of winning popular support from
consumers in India because the fresh catches of anchovy, lobster, crab,
sardine, mackerel, shark, shrimp and squid they are used to will soon be
replaced by refrigerated imports."
Peter said that at a time of deep financial and agrarian crisis - when many
countries are rejecting free trade policies - the Singh government's argument
that India will be isolated in the world economy if it does not sign this FTA
was hard to swallow. "We do not believe that adequate scrutiny of this FTA has
been done - agriculture and fisheries groups in Kerala and other states have
certainly not been consulted."
"As far as fisheries are concerned, recent years have seen fish stocks depleted
due to over-fishing by trawlers and foreign vessels and falling prices forcing
many fishermen in Kerala to find other means of livelihood," Peter said.
"Further liberalization of fisheries in the name of increasing trade will only
deepen the problems of the fishing community."
The biggest threats come from Thailand, the world's largest exporter of farmed
shrimp, and Vietnam, the world's eighth largest seafood exporter.
Afsar Jafri from Focus on the Global South, a regional research and campaign
group that monitors trade liberalization initiatives in Asia, said Malaysia's
powerful palm oil industry has been lobbying hard for the FTA. "Malaysia is the
world's largest producer of this vegetable oil and its duty free import into
the Indian market will adversely impact crops like tea, coffee,coconut, rubber
and pepper farmers."
Verghese said that Kerala's food security has already been compromised by an
extensive shift from staples such as paddy to cash crops with the central
government providing no support against price fluctuations.
"Even if a negative list provides protection to major cash crops, as is being
claimed by central leaders, it is only for a few years," Verghese said. "What
is the guarantee that crops like rubber, tea, pepper and coffee will gain in
productivity and competitiveness in that time?"
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