Agri Business

India’s support price for rice under WTO lens as US, EU question ‘peace clause’

Amiti Sen New Delhi | Updated on July 30, 2020

Six countries ask India 25 questions on additional notification obligation, trade impact

India’s minimum support programme (MSP) for rice is under scrutiny at the World Trade Organisation with the US and the EU challenging the increase in subsidies beyond ceiling (de minimis) limits in the marketing year 2018-19.

Invocation of the ‘peace clause’ by India to justify the subsidies was also questioned by the opposing members who posed several queries on the various conditions, including notification requirements, that are to be met for the purpose as decided at the Bali Ministerial meet, a Geneva-based official told BusinessLine.

“The main challengers of the invocation of the ‘peace clause’ were the US, EU, Canada, Brazil, Japan and Paraguay who registered a total of 25 questions in relation to India’s additional notification obligations, reporting methodologies and the trade impact of the support,” the official said.

Earlier this year, India had informed the WTO that it had breached the subsidy limit fixed at 10 per cent of the value of food production for developing countries (under the Agreement on Agriculture) for rice in 2018-19. It had provided subsidies worth $5 billion to rice farmers against rice production worth $43.67 billion in the period.

Peace clause

New Delhi invoked the ‘peace clause’ of the WTO agreed to at the Bali Ministerial meeting in December 2013 while breaching the subsidy limits. As per the ‘peace clause’, no action will be taken against India, or other developing countries, in case the subsidies on their food procurement programmes breached the ceiling of 10 per cent of value of production.

While the peace clause is supposed to remain in perpetuity till a permanent solution on public stockholding for food security is mutually agreed to by members, it comes with a series of conditions related to notification obligations and ensuring food security of other countries.

India, in its defence, said the breach of de minimis limits for rice was covered by the ‘peace clause’, and it has submitted full information in line with the specific notification requirements of the decisions, some members were not convinced.

New Delhi’s stance

New Delhi maintained that the marketing year 2018-2019 was the only year that it exceeded the de minimis support for rice. It clarified that although India’s public stockholding programmes covered rice, wheat, coarse grains and pulses, only the support on rice breached given limits, the official said. “India also stated that the 850,000 tonnes of rice stocks subsequently sold on the domestic market were not allowed for export, preventing the risk of distorting global markets,” he added.

India also said that it will give the full-detailed responses in the Agriculture Information Management System (AGIMS) on the WTO in due course and that it is open for bilateral consultations with members with further questions.

The EU said that more evidence was needed on how India ensured the rice stocks are not dumped on the global market. It also said that all the information on the products covered by the public stockholding programme should be provided in order to tell for sure that only rice support exceeded the limits.

Other countries said that they would go through India’s responses carefully before discussing future action.

Published on July 30, 2020

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