India faces ‘food security’ hurdle in WTO

India’s demand for a permanent solution on public stockholding subsidies at the World Trade Organization (WTO) is being challenged by several members, including Canada, the EU and the US, which are insisting on stiffer safeguards, restricted product coverage and a linkage with pruning of overall domestic support.

“As the deadline for coming up with a permanent solution at the WTO Ministerial Meeting next month is drawing near, developed countries and also some developing nations exporting farm produce are coming up with various proposals to dilute the provision.

“This is unacceptable to both India and other members of the G-33 group as the livelihood of our farmers and poor depends on our public stockholding programmes,” a government official told BusinessLine .

Food purchases at fixed prices or administered prices (such as the minimum support price programme) are considered to be subsidies at the WTO and counted towards the country’s overall ceiling on trade-distorting support (fixed at 10 per cent of value of produce for developing countries).

India and the G-33 group of 62 developing countries have been protesting against the provision, which goes against food security in poorer countries. A decision on an interim solution was taken at the Bali Ministerial meet in December 2013. It was decided that no penalties would be imposed for breach of limits subject to certain safeguards (peace clause) and a permanent solution would be in place by the end of 2017.

The Buenos Aires Ministerial meet is on December 10-13 and members are trying to reach an agreement on a small package of issues, including disciplining fisheries subsidies and agriculture subsidies and a permanent solution on public stockholding.

“Attempts are now being made to make the safeguards for getting the exemption so onerous that most developing countries would not be able to use them,” said the official, privy to a recent special session on public stockholding, at the WTO. For instance, Canada said at the meeting that a permanent solution should include an ‘ex ante’ transparency requirement, and safeguards should be in place to ensure that countries should not increase applied tariffs for the products procured under public stockholding programmes. This means that countries have to inform in advance a breach or a potential breach, which, for the G-33 countries is not a feasible option.

“This provision is completely unrealistic. Why should a country on its own invite trouble by stating that its subsidies might breach the given limits? It is also difficult to calculate as the market situation is volatile,” the official said.

To ensure that new food crops also get covered, India and the G-33 want the current language in the Bali Decision to be replaced by “foodstuffs” as the existing phrase — “traditional staple food crops” doesn’t cover all food crops.

The US and many other developed countries have, however, raised strong objections to changing the Bali text.

The EU, backed by Brazil, is insisting that a permanent solution should not be negotiated independently and should be tied to pruning of overall domestic subsidies, which has been rejected outright by India and the G-33.

Indonesia, speaking on behalf of the G33 at the meeting, reiterated the group’s position that the issue should not in any way be linked with domestic support, and any linkage would prevent members from achieving an outcome in Buenos Aires.

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