Shanta Kumar, Chairman of Parliamentary Standing Committee on Commerce, has written to Prime Minister Manmohan Singh demanding that India should not accept the ‘peace clause’ in agriculture offered by developed countries at the World Trade Organisation.

The peace clause proposes to give a four-year relief against penalties to developing countries for exceeding food subsidy limits. However, it imposes strict conditions including compulsory disclosure of details on implementation of subsidy programmes that India may find hard to follow.

“It is apprehended that the peace clause which is contained in the negotiating text would disturb our procurement system, thereby adversely affecting small and marginal farmers through (functioning of) MSP,” the letter said.

India has been demanding a change in WTO’s rules on agriculture that allows developing countries to give food subsidies up to 10 per cent of its total agriculture production. India runs the risk of breaching the given cap after it fully implements its Food Subsidy legislation.

The country also wants that inflation should be factored in while calculating the level of subsidies as the current method of using prevailing world food prices in 1986-87 has become irrelevant.

A decision on the peace clause is likely to be taken at the meeting of trade ministers of WTO countries in Bali starting on December 3.

The Cabinet Committee on WTO will meet on Monday to take a decision on the stand that India would take on the issue at Bali. New Delhi has been insisting that the peace clause be linked to finding a permanent solution to the problem, but developed countries are not ready for it.

Developed countries including the EU and the US are of the view that food subsidies need to be capped if they affect world food prices.

> amiti.sen@thehindu.co.in

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