Policy

India says it will not accept limits on farm input subsidies at WTO

Amiti Sen New Delhi | Updated on March 04, 2020 Published on March 04, 2020

Argues that developed countries need to prune their trade distorting subsidies first

India has said it will not accept any limits on subsidies on farm inputs such as seeds and fertilisers, at the on-going negotiations of the World Trade Organisation, to support low-income and resource-poor farmers as it was a livelihood issue.

WTO members are trying to reach an agreement to limit farm subsidies at the forthcoming Ministerial Conference in Kazakhstan in June, but in a recent submission made by India’s representative, it was clarified that the country was not going to give up its flexibility of not capping its agriculture input subsidies.

Article 6.2 of the Agriculture Agreement allows developing countries additional flexibilities in providing domestic support which includes input subsidies generally available to low-income or resource-poor producers.

Such input subsidies are not subjected to caps as other farm subsidies, like price and income support, which are all included in the Aggregate Measurement of Support (AMS) category that has limits (called de minimis entitlements) of 5 per cent of agriculture production for developed countries and 10 per cent for developing countries.

“I would like to emphasise that Article 6.2 support is meant for low-income and resource-poor farmers in developing countries. This is a special and differential treatment flexibility to support rural development, food and livelihood security of marginal farmers, therefore, by its very definition, it is minimally trade distorting. Therefore, there can be no question of accepting any limits or reduction in Article 6.2 support,” India’s representative to the WTO stated at the informal Trade Negotiations Committee meeting this week.

India noted that there has been a recent push at the WTO to advance negotiations on domestic support with the narrative of capping and reducing all forms of trade and production distorting domestic support. But only when Final Bound Total (FBT) AMS entitlements are capped, reduced and eliminated, will the country support a discussion on disciplining other forms of domestic support, it said.

Most developing countries’ AMS are bound only by the de minimis of 10 per cent, while many developed nations have their individual AMS levels bound at a much higher level.

“It needs to be kept in mind that FBT AMS is far more trade distorting than de minimis entitlements and reasons for this are clear. FBT AMS does not have any product specific limitations. All FBT AMS of a member can be channelled into a single product, say cotton, thereby greatly distorting global trade in cotton,” the submission highlighted.

The next WTO Ministerial meeting is scheduled in June 2020 in Kazakhstan where the issue of limiting farm subsidies is likely to be discussed.

Earlier, India and China had submitted a joint paper which highlighted that rich nations, including the US, the EU and Canada, have been consistently giving trade-distorting subsidies to their farmers at levels much higher than the ceiling applied on developing countries.

Together, the developed world has cornered 90 per cent of total entitlements, amounting to a whopping $160 billion annually, the paper said.

Published on March 04, 2020

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