SOIL Report 2008 - ACCESS Development Services

Policy: Pathways to Sustainable Livelihoodsthose employed in the unorganised sector. An analysis of trade policies demonstrates how neo-liberalapproaches may dictate the outcomes, especially in terms of sectoral performance, and its implicationsfor gender and social protection. Trade policies of developed countries seek to promote their “internalpolicies of creating a single market by an agenda of progressive liberalisation and deregulation”.India has already become important as a trade partner for the developed economies, and is already animportant production base and outsourcing destination for European operators. It considers an exportledand free trade model a powerful driver of economic growth, development, and employment, andhas adopted the liberalisation model, enhancing its export industries in manufacturing and informationtechnologies, and its access to foreign markets. The question that arises in the context of sustainablelivelihoods in India is whether there is coherence between India’s development agenda and its trade andinvestment agenda. Will trade and other policies of liberalisation contradict or support the Indian policyperspectives on poverty eradication, social protection, social inclusion, and gender equality?If one examines just one large trade partner, the European Union (EU), analysis shows the followingareas of concern:1) Current trade policies uphold the competition paradigm subordinating and redefining the developmentparadigm. This is based on the trickle-down theory, which believes that growth will lead to development.Despite rising evidence to the contrary, the EU has cut down its aid for human development and antipoverty-programmesand instead shifts assistance to economic cooperation and aid for trade. This reversesthe means-end-relation: Development aid becomes a tool for enhancing trade.Will tradeand otherpolicies ofliberalisationcontradict orsupport theIndian policyperspectiveson povertyeradication,socialprotection,socialinclusion,and genderequality?2) The EU gives special attention to non-tariff-barriers, to international regulatory convergence andreciprocity of trade liberalisation. The underlying assumption is that the EU and India are equal partners.However, a high asymmetry prevails in many sectors and areas, let alone the fact that the Indian percapita GDP is only 7 per cent of the EU GDP. Demanding reciprocal trade liberalisation in asymmetricpower relations and advancing equal trade rules between unequal trade partners disregards the existingeconomic disparities, in particular different levels of development and different social needs. Mechanismslike reciprocity and harmonisation of tariffs and regulations among unequal partners tend to privilegethe stronger parties, countries and companies, and disadvantage the weak actors in the markets. Seekingthe removal of domestic regulations which protect local industries against foreign investors, lifting offoreign direct investment (FDI) restrictions on performance standards like local content requirementsand dismantling of capital control means to limit the policy space of the partner. It limits governments’right to use regulation as a policy instrument for their development priorities e.g. food sovereignty orfor positive affirmative action, e.g. subsidies for small women producers because positive discriminationwould be considered trade-distorting.” 4Additionally, the EU asks for opening up government procurement and does not exclude essentialservices, 5 patenting of living organisms like seeds in agriculture, 6 and enforcement of intellectual propertyrights for pharmaceutical products, which would prevent production of cheap medicines. Further, theprocess of trade negotiations lacks transparency and democratic legitimation through consultation ofparliaments and civil society, with business confederations from both sides getting privileged space tolobby (Wichterich, 2007).The crucial question raised by Europe-based NGOs and networks is whose needs, whose rights andwhose interests can be safeguarded or enforced through the offensive EU agenda for speedy and deepmarket liberalisation in India? Does the envisaged bilateral FTA serve the objectives of sustainabledevelopment, poverty eradication, social and gender justice and human rights such as food sovereignty4UNCTAD (2007): Trade and Development Report, Geneva5This could imply privatisation of water and energy supply which has led to an increase of prices in other countries, and distorted poor people’saccess to basic services.6This poses a threat to the production systems of farmers and deprives them of the most important livelihood resources and biodiversity.75