India refuses to budge on farm subsidies, scuttles WTO deal

Our Bureau New Delhi | Updated on December 18, 2017 Published on August 01, 2014

Director-General Roberto Azevedo says negotiations will resume in September

India’s refusal to compromise on its demand for a permanent solution to the issue of food stocks and subsidies put paid to what would have been a landmark trade facilitation deal.

Talks at the World Trade Organization (WTO) failed as developed countries such as the US and those from the EU opposed India’s demand for a commitment that no action would be taken against its stockpiling and agricultural subsidies till there was a permanent solution to address its food security concerns.

“Developed members were not prepared to go along with India’s revised proposal, which led to the breakdown in talks,” a Commerce Ministry official said.

The new government has refused to budge on its demand for a permanent solution to the issue of food stocking and subsidy caps. India wants to protect its subsidy programme from any retaliatory action if the WTO cap on stockpiling is breached.

India has suggested that as a permanent solution, its food procurement subsidies should either not be subjected to the 10 per cent cap, or the reference price for calculating the subsidies on foodgrain should be made more realistic by bringing it to the current year from the 1986-88 base rates.

Big deal

The trade facilitation deal aimed at lowering trade costs by reducing paperwork, easing border delays and speeding up transit, thereby increasing the flow of goods and, in turn, revenue generation.

The July 31 deadline to endorse the deal was agreed to at the WTO Ministerial Meet in Bali in December last year. In Bali, India was extended protection for its subsidies under a ‘peace clause’ up to the 11th Ministerial in 2017.

While at that time India believed that the ‘peace clause’ could be extended indefinitely, this was not the case, forcing the government to adopt a tough stance. New Delhi wants a solution to the issue to be worked out by December 31. WTO Director-General Roberto Azevedo has asked all members to come back to the negotiating table in September.

Back to the negotiating table

“We are ready to engage constructively and strike a deal on both trade and food security in September itself,” said the Commerce Ministry official.

PTI reports: Against the backdrop of the US blaming India for the failure of the WTO talks, Prime Minister Narendra Modi on Friday said developed countries should “understand” the challenges of poverty in developing nations and their governments’ responsibilities to address them.

Modi conveyed the message to US Secretary of State John Kerry and Secretary of Commerce Penny Pritzker when they called on him, according to a statement by the Prime Minister’s Office.

Published on August 01, 2014
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