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In Defense Of Armenian Farmers

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  • In Defense Of Armenian Farmers

    IN DEFENSE OF ARMENIAN FARMERS
    TED TOURIAN

    Asbarez
    Nov 30th, 2009

    The recent protocols signed between Armenia and Turkey have divided
    Armenians throughout the Diaspora, and Armenia itself.

    Provisions (or lack thereof) that caused much debate include:
    recognition of mutual borders; "implement[ing] a dialogue on the
    historical dimension with the aim to restore mutual confidence between
    the two nations, including an impartial and scientific examination
    of the historical records and archives to define existing problems
    and formulate recommendations (in other words, a truth commission
    to re-examine claims whether the Armenian genocide occurred) ; as
    well as not addressing the issue that Turkish implementation of the
    protocols are directly tied to Armenia's appeasement and rapprochement
    with Azerbaijan on issues from Karabakh, to the possible surrender
    of Meghri province in order for Azerbaijan to have a direct border
    with Nakhichevan.

    The goal of this article is not to rehash these discussions.

    Rather, the purpose of this article is to discuss the ramifications
    to Armenian farmers (and Armenian society at large) if the borders
    are opened, without adequate tariffs or tax incentives to protect
    Armenian farmers. This article is divided into the following sections:
    a) Why tariffs and tax credits matter to Armenian farmers; and b)
    Why the survival of Armenian farmers is necessary for the survival
    of Armenia, especially considering Turkey's "good-neighbor" policy.

    Why tariffs and tax credits matter to Armenian farmers

    The case for protectionist measures is best illustrated by comparing
    the protectionist measures of first-world countries as opposed
    to third world countries. Generally speaking, developed countries
    normally engage in a game of feeding developing countries carrots by
    promising to lower tariffs on food stuffs in the future if developing
    countries immediately lower tariffs on industrial goods and services.

    This point is illustrated where the United States is subject to
    claims that they unfairly subsidize over $23 billion per annum to
    their agricultural sector, and an organization like the World Trade
    Organization has been unable to adequately mediate such conflicts.

    In addition to trade tariffs the United States imposes on foreign
    countries, the United States Internal Revenue Code is littered with
    provisions delaying recognition of income, as well as providing tax
    credits to small-sized farmers.

    The United States is not the only industrialized country to engage
    in these practices. For example, Japan levies a 490 percent tariff
    on rice imports, and has opposed tariff-lowering proposals in ongoing
    global trade negotiations on agricultural products. The European Union
    has also engaged in these types of tariff regimes, where, the World
    Trade Organization has argued that such tariffs should be removed to
    help developing countries compete. These concerns have fallen on deaf
    ears, as the reality of the matter is that each nation is concerned
    about their own survival rather than a foreign one.

    So why do industrialized countries engage in these practices?

    By 2050, the global population is expected to exceed 9 billion. In
    order to meet these demands, global food supply needs to increase
    by 70 percent, according to the United Nations Food and Agriculture
    Organization. This fact makes it necessary that each country ensure
    that their food security is protected in the long-run. A country's
    bread-basket is always protected, irrespective of the empty rhetoric
    espoused by certain idealist economists, English PhD students,
    architectural graduates, or just about anyone that feels they know
    something about economics.

    If Armenia opens the Armenian-Turkish border without any of these
    protectionist measures, its farmers should expect to see fierce
    competition that will most certainly, and not without a cruel sense
    of irony, cause these very farmers to starve.

    The first point of analysis should be directed to how Turkey treats
    its farmers. The OECD estimates that Turkish government support for
    the farm sector amounted to 4.4 per cent of GDP in 2003. Furthermore,
    Turkey (like the EU) is gradually moving away from setting prices and
    intervening in markets and towards paying direct support to farmers.

    This point is important because the EU and Turkey are both WTO members,
    where the WTO requires member nations to stop interfering by setting
    tariffs and other forms of subsidization.

    What this means is that the Turks recognize the importance of food
    security for their own country, and are willing to spend money to
    keep its farmers afloat, and producing, despite the fact that its
    farm industry is characterized as inefficient, and backwards.

    Furthermore, since Armenia joined the WTO, it will also face these
    same restrictions. However, unlike the EU and more importantly Turkey,
    the Armenian government will not be able to pay its farmers directly
    due to constraints on its own financial resources. Furthermore,
    since joining the WTO, Armenia will have a clear disadvantage in
    propping up its farmers where Armenia is left with the following
    commitments with respect to agricultural export production support,
    as a result of Armenia's failure to procure developing nation status
    or negotiate separate advantages with respect to domestic support:

    1. Almost all import restrictions have been terrified, and tariffs
    are bound at a rate of 15% for import of all agricultural products,
    with the exception of a few lines;

    2. Export subsidies are bound at zero level, Armenia will not be
    allowed to apply any support subsidies for the export of agricultural
    products;

    3. Armenia's is allowed minimum subsidization support for their farmers
    such as low-interest rate loans, and Value Added Tax exemptions.

    Clearly, the importance of this is that Armenia must find other ways
    to support its farmers, whether it is through tax incentives or other
    measures for its farmers. It seems as though the west and Turkey have
    conspired to bring Armenia in line by giving accession to the WTO,
    and then force Armenia to remove any protectionist measures for
    its farmers.

    Second, Turkey has the capacity to produce huge amounts of
    agricultural products that have the potential of flooding the Armenian
    market. Around 32% of total employment in Turkey is in agriculture
    sector, and total exports of agricultural products exceed $8 billion
    (as of 2005).

    Armenia on the other hand, is boasting that as of 2005, its
    agricultural exports rose to just over $100 million (approximately 1%
    of Turkish exports). However, Armenia imports $300 million worth of
    agricultural products. This is approximately the same percentage that
    it imported in 1991.

    These figures clearly show is that the Turkish agricultural sector
    can clearly envelope the Armenian agricultural sector, with little
    Turkish interference, thereby completely, and possibly eradicating
    the Armenian agricultural sector.

    Why the survival of Armenian farmers is necessary for the survival
    of Armenia, especially considering Turkey's "good-neighbor" policy?

    Since 1991, the percentage of agricultural products Armenia has
    imported has roughly stayed the same. However, the total volume has
    more than tripled. As such, the necessity of Armenia's agricultural
    sector is necessary in order to provide Armenia with food security
    over the long-run.

    However, opening the border with Turkey (especially with the new trade
    obstacles imposed by the WTO) is problematic, especially considering
    Turkey's neighborly relations.

    Ignoring the continued denial that the Armenian Holocaust took place,
    Turkey has a long list of poor neighborly conduct; from the invasion
    of Syria to retake the French-mandate of Cilicia; occupying Northern
    Cyprus; the illegal blockade of Armenia; systematic killings of
    its Turkish minority; sending military personnel to Northern Iraq
    during the recent American-Iraqi war; preventing the Americans
    (their staunchest supporters) from using Incirlik airbase; to even
    the recent cooling relationship with Israel over the Palestinian
    cause. This pattern clearly shows that Turkey answers to no one,
    without any sense of loyalty to friend or foe, alike.

    As such, it is entirely possible that Turkey could be willing to use a
    new type of warfare with Armenia through economic trade, by flooding
    Armenia with goods, destroying Armenia's agricultural sector, and
    then, when Armenia becomes dependant on Turkish goods in order to
    feed itself, changing the rules of the game to Armenia's detriment.

    If Armenia fails to take the necessary steps to protect its farmers,
    it should expect to be conquered by its far larger neighbor, without
    a shot ever being fired.
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