A furious debate is raging in Kerala over the merits and demerits of the free trade agreement which India signed with the Association of South-East Asian Nations (Asean) this month. The Communist Party of India-Marxist (CPI-M), which leads the ruling Left Democratic Front (LDF), has mounted a campaign against the agreement, saying it will ruin the state's agricultural sector.
Chief Minister VS Achuthanandan has accused the prime minister of not honouring the promise to consult the state government before signing it.
Former chief minister Oommen Chandy, who has taken upon himself the task of defending the agreement, signed by the Congress-led central government, claims it contains enough provisions to safeguard the interests of the state's farmers.
Asean, the 10-nation group which accounts for about 10 per cent of world commerce, is already India's fourth largest trading partner. Last year India-Asean bilateral trade stood at US$40 billion. It is expected to go up to $50 billion by next year. The agreement, limited to trade in goods, covers 12,169 items.
They include coconut oil, pepper, coffee, tea and rubber, which are among Kerala's major commercial crops. Since Asean countries like Malaysia, Indonesia and Vietnam produce these items or substitutes at lower costs than Kerala, free import will hurt the state's farmers by bringing down prices. After China signed a free trade agreement with Asean, it was imperative for India to follow suit.
To protect the interests of the state's farmers and fishermen, the government, through negotiations spread over six years, persuaded Asean to place some items on a "negative" list. Duties on these items are to be reduced in stages over the next 10 years.
To begin with, 303 items have been placed in the negative list, which is subject to annual review. They include copra, coconut, cashew, cardamom, ginger, rubber, rice, tapioca, sardine, shrimp, crab, milk and milk products, banana and pineapple.
The Asean pact has emerged as a major bone of contention between the CPI-M and the Congress, the chief rivals in the struggle for power in the state. As usual, the two parties are trying to score debating points, hoping to convert them into votes. The CPI-M, which is yet to recover from the crushing defeat in the Lok Sabha elections, sees the Asean pact as an ideal substitute for the issue of globalisation, which no longer yields electoral dividends.
The Kerala Karshaka Sangham, a farmers' organisation controlled by the CPI-M, has called for boycott of Asean products.
Oommen Chandy has charged that in opposing the Asean agreement the CPI-M is serving the interests of China. He claims that the "negative" list is a unique feature of Asean's pact with India and that this was introduced to protect Kerala's interests.
The latter's claim cannot be taken at face value as the list contains items like apple and orange, which have no relevance to the state. He points out that the agreement gives Kerala 10 years' time to make its farms products competitive.
The Centre has offered help to rebuild the agricultural sector in this period. Rubber is the only item in the negative list in which Kerala has higher productivity than the Asean countries. Experts feel the state cannot improve productivity and profitability of other crops to a point where it can withstand competition from the Asean countries within a decade.
They also doubt its ability to benefit from the central schemes designed to help the farmers. They point out that, although the Centre has raised the support price of copra to a record level, coconut growers are suffering as the state government failed to undertake large-scale procurement.
With the CPI-M and the Congress approaching the issue from the standpoint of possible political gains, a fundamental question that begs for has not come up in the debate: why is it that agriculture in the state has been continually declining? The short answer to the question is that over the years rising wages and falling productivity made farming uneconomic.
Successive governments, headed by the leaders of the two fronts, were unable to reverse the trend. The state's growers account for 90 per cent of the country's rubber output. The Rubber Board's promotional effort helped them to achieve a high level of productivity. Boards set up for the promotion of other crops like coconut and spices have not been able to match its performance.