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.