Government’s transport assistance for farm produce exports under attack at WTO

The new transport and marketing assistance scheme for farmers announced by the Union government in March has raised the hackles of some developed countries which are now questioning it at the World Trade Organization (WTO).

While Australia has said that the scheme may have flouted a decision on limiting such subsidies taken at the WTO’s Nairobi Ministerial meet in December 2015, the US has sought more details on the items being given such subsidies.

“The questions submitted by Australia and the US to India on its transport and marketing assistance scheme will come up for discussion at the Committee on Agriculture meeting on June 25-26. More countries may join the discussion at that time,” a Geneva-based trade official told BusinessLine .

The scheme under scrutiny provides assistance for the international component of freight and marketing of agricultural produce which is likely to mitigate the disadvantage of higher cost of transportation of export of specified agriculture products due to transshipment and also to promote brand recognition for Indian agricultural products in specified overseas markets. These include North America, the EU, some countries in South America, China, the ASEAN, New Zealand and Australia.

It is currently available for exports from March 1, 2019 to March 31, 2020. Its applicability will be specified from time to time.

Pointing out that the assistance provided under the scheme qualified as an export subsidy under the WTO agreement, Australia said that the move went against the Nairobi Ministerial commitment of reducing such subsidies rather than increasing them.

Australia’s submission acknowledged that the Nairobi decision was to allow developing countries to continue to give transportation and marketing subsidies till 2023, but there were also some caveats.

“India is also obliged by the subsequent paragraphs of the Nairobi Decision, which note that members shall not apply export subsidies in a manner that circumvents the requirement to reduce and eliminate all export subsidies; members shall seek not to raise their export subsidies beyond the average level of the past five years on a product basis; and members shall ensure that any export subsidies have at most minimal trade distorting effects and do not displace or impede the exports of another member,” the submission stated.

Australia has asked India to explain how the transport and marketing assistance scheme is in tandem with the Nairobi Ministerial decision and what step the country has taken to ensure that it will have minimal trade distorting effect on other members.

The US asked India to disclose how much the government had budgeted for the scheme in the on-going year and also give details of other subsidies given to products getting assistance under the new scheme.

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