In a potential breakthrough on the contentious issue of a permanent solution for public stockholding subsidies pushed for long by India at the WTO, the EU has said it is ready for negotiations on the matter with a focus on ‘adequate safeguards’, but the US remained inflexible, a Geneva-based trade official has said.

“The EU responded positively to the WTO agriculture committee chair’s proposal for negotiating safeguards, to prevent illegitimate exports from procured food stock, for an agreement on a permanent solution. The US, however, rejected outright the idea of expanding the Bali interim solution, that offers relief to developing nations from legal action in case their MSP subsidies breach the cap of 10 per cent of production value, and said that MSP for public stockholding programmes had a detrimental effect on global food security,” the official told businessline.

Text-based talks

India appreciated the EU’s willingness to negotiate on public stockholding and urged members to start text-based negotiations soon on the basis of its joint document with some other countries which has been supported by over 80 developing countries, the official added.

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Discussions on public stockholding took place at a special negotiating session on agriculture at the WTO, on October 2-3, to bridge differences so that an outcome was possible at the next ministerial meeting in February 2024.

Developing nations, such as India, Indonesia, Egypt, South Africa and Nigeria, both individually, and as part of groupings, have been asking the WTO to either remove the existing 10 per cent cap (on production value) on food procurement subsidies, or calculate the caps based on more recent external reference price (instead of 1986-88) to make it more realistic. This is essential for the food security of their population, they argued.

‘Peace Clause’

While the Bali ’peace clause’ under the interim solution reached in 2013 offers protection to developing nations against legal actions in case of subsidy cap breach, it comes with onerous conditions related to notification obligations and ensuring food security of other countries which makes it precarious.

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“The largest beneficiary of the Bali interim solution has been India which used it for rice. But it has constantly been questioned by several developed nations on reporting parameters. The US has even disputed that the interim arrangement had contributed to India becoming a top exporter of rice. A permanent solution suitably negotiated could bring a long-term resolution to such issues and also expand the coverage,” the official said.