India’s recent free trade agreement (FTA) with the Association of South East Asian Nations (ASEAN), set to take effect from the New Year’s Day next, is good for the country but highly harmful to Kerala’s cash-crop growers, according to Kerala Congress (M) leader K.M. Mani.
Mr. Mani’s party, which has a lone member in the Lok Sabha, is an alliance partner of the UPA government at the Centre and of the Opposition UDF in Kerala.
Mr. Mani said his party was not going to launch an agitation or direct action against the trade pact as was being proposed by the ruling LDF. It would rather prefer reasoning and lobbying with the Central government in order to convince it of the debilitating effects of the pact on Kerala’s farmers as well as fish workers.
In view of the heavy loss, the farmers would suffer in terms of domestic prices for their produce, Mr. Mani said at a news conference here. Prime Minister Manmohan Singh should give an assurance to them that they would be compensated for.
“Prices will fall”
“The prices of coconut, pepper, tea and other crops will fall for sure because of the heavy cuts in the import duties on these commodities from South East Asian nations following the signing of the trade pact,” said Mr. Mani,a former minister of revenue and finance in several Congress-led governments in the State.
Mr. Mani said the compensation to be paid to the Kerala farmers could be direct cash subsidy or Centre-sponsored infrastructure development projects that could add to the productivity of agriculture so that the farmers could collectively reap the benefits.
He pointed out that though the agreement was fait accompli, there was still room for further negotiations on the quantum of cuts in import duties and that India could pressure ASEAN to modify the provisions relating to coconut,pepper, tea coffee, palmolein etc.
He noted that the coconut sector would be the worst sufferer as the current 80 per cent import duty on it was set to becut to 37 per cent in phases by 2019. The duty cut would attract a flood of palmolein imports and thus knock down the price of coconut oil and coconuts.
The current 100 per cent duty on tea and coffee would be reduced to 45 per cent, thus hitting the tea and coffee plantations. Likewise, pepper’s duty, 70 per cent now, would go down to 50 per cent, thus attracting cheap imports from the South East Asian countries.
However, Mr. Mani said the ASEAN pact would benefit India’s economy and regional clout. It would help the country’s IT sector and boost foreign investments. The only problem was that it would hurt Kerala’s farmers. But this could be taken care of if Dr. Singh gave an assurance on a quid pro quo with them.