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India’s proposal at the World Trade Organisation (WTO) to allow developing countries to spend on public stock holding and food aid beyond stipulated subsidy limits will be discussed at a crucial agriculture group’s meeting this week.
A relaxation in farm subsidy limits at the WTO is important for India because once the Food Security Act is implemented across States shortly, it may lead to a breach of existing subsidy limits and attract penalties at the multilateral forum. India is hoping that a decision on the matter will be taken at the forthcoming WTO Ministerial meet in Bali in December.
“We have made it clear to the developed members of the WTO that we will have to give out increased subsidies to our poor now that we are implementing our Food Security Act. WTO rules should not stop us from doing our duty towards the poor,” a Commerce Department official told Business Line .
The Agreement on Agriculture allows so-called ‘market distorting subsidies’ up to a limit of 10 per cent of total production. While such subsidies were negligible in India during the Uruguay Round in the late eighties and early nineties when these rules were being framed, it is now hovering close to the limits set and could be breached soon.
The proposal, which is being pushed at the WTO by the G-33 group of developing countries of which India is an active member, calls for an amendment in the WTO’s Agreement on Agriculture to loosen disciplines on domestic support, including public stockholding and food aid, in order to enhance food security by supporting poor farmers and consumers.
The G-33 is trying to build consensus around its proposal before the Bali Ministerial, so that the entire membership can endorse the amendment in the Agriculture Agreement.
Consensus is slowly building on the proposal with developed members including the EU, Norway and Australia agreeable to support it provided the G-33 makes some amendments in its proposal to ensure that the flexibilities are not misused by any country.
While the dead-locked Doha Round of the WTO does not seem anywhere close to being re-started, members are trying to get an agreement on some key issues at Bali including food subsidies and trade facilitation.
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