India’s attempt to get a permanent solution to make its minimum support price (MSP) programmes for public stock-holding non-actionable at the WTO this year is facing a serious challenge from the US, the EU and Australia-led Cairns group, who are objecting to many of its crucial suggestions.

At a recent meeting of the WTO’s Committee on Agriculture for firming up an agriculture package for the WTO Ministerial Conference (MC-12) in late November this year, the US criticised India’s MSP programme for being ‘trade-distortive’, and said there was no evidence that it was the best way to achieve food security, a Geneva-based trade official told BusinessLine .

The EU and Cairns group opposed a standalone permanent solution pushed by India and other members of the G-33 group (an alliance of developing countries with defensive interest in agriculture) for an early decision on the matter, and instead proposed that public stock-holding should be part of the structured solution on domestic support in general.

“Despite the divergences, the Chair of the Committee reported that members agreed public stock-holding was an important policy tool for food security purposes, should not distort agricultural trade, should be transparent with various safeguards, and should only be for food security purposes,” said the trade official.

Protecting livelihoods

India and other developing countries keen on protecting the livelihoods of their poor farmers want the WTO to prioritise a permanent solution on the public stock-holding issues so that their MSP programmes for farm produce are not penalised for breaching ceiling levels. “A solution can be arrived at in more than one ways such as weaving in exemptions and changing the formula for calculating subsidies. However, the matter should not be delayed further and a solution needs to be carved out at MC-12,” another official pointed out.

The WTO includes the subsidy provided under MSP for public procurement in the category of trade distorting support, which has to be maintained within a fixed ceiling of 10 per cent of the value of production. India and the G-33 have been fighting for the flexibility to give higher MSP.

At the Bali Ministerial in 2013, all members agreed on an interim “peace clause”, with an assurance that a permanent solution would be adopted by 2017. As per the “peace clause”, developing countries can provide subsidies under public stock-holding programmes without being legally challenged even if the subsidies breach the ceiling rates. However, since the clause is subject to numerous notification requirements and the assurance that it would not distort global trade, developing countries want a more effective and less stringent permanent solution.

As the initial deadline of 2017 for a permanent solution on public stock-holding is long past, the proponents, including Indonesia (on behalf of G-33), Jamaica, India, China and South Africa, want a standalone one, but the EU and the Cairns group are insisting that it be clubbed with other domestic support.

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