India is facing a tough fight at the WTO over its demand for a permanent solution to the sticky issue of public stock holding programmes, including upper-limits on MSP pay-outs for food crops, at the 12th Ministerial Conference (MC12) in June this year with some members  accusing it of adopting a ‘self-centric’ approach.

At the recent special session of the Committee on Agriculture at the WTO, Canada, New Zealand, and Paraguay raised concerns after India demanded that food security of developing countries need to be resolved first before newer areas of trade liberalisation or reducing trade-distorting subsidies were taken up, a Geneva-based trade official told BusinessLine. “Canada asked whether India was threatening to block other negotiations if the public stock holding (PSH) mandate was not delivered,” the official said, adding that some members accused India of taking on a ‘self-centric’ approach.

PSH subsidies

At present, PSH subsidies, including those given for MSP programmes for crops, are treated as trade distorting subsidies by the WTO subject to a ceiling of 10 per cent of the value of production. India and the G-33 coalition of developing countries and LDCs have been fighting for the flexibility to give higher MSP to ensure food security for millions of its population.

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The LDC group came up with a proposal on a permanent solution at the meeting which included a suggestion that food purchased under an administered price that was lower than international prices should be exempted from the 10 per cent cap that led to queries on whether it should be for LDCs or also developing countries.

WTO meet in June

With the Ukraine war leading up to a possible widespread food crisis, members are largely in agreement that food security needs to be at the heart of any agreement on agriculture at the WTO MC12 scheduled on June 12-15 in Geneva, the official said. But there is a disagreement over whether a permanent solution for public food stockholding needed to be at the centre of an agreement, with some members including the US, Australia, the EU and Brazil, questioning its real effect in the current context.

India said it could not accept the Chair’s text proposal to have a so-called work programme for PSH at MC12 as the Bali Ministerial Conference decision of 2013 on the matter had already put a work programme in place that had directed members to find a permanent solution by 2017, which had not yet happened.

Although a peace clause negotiated by India at the Bali Ministerial gives developing nations protection against legal action in case limits are breached, it is subject to a number of onerous conditions that makes it difficult to use. India has used the peace clause for rice as its MSP support has been exceeding the prescribed limits but several developed country members have  complained that it has not met notification requirements under the clause. That is why the G-33 is insistent that a permanent solution be delivered so that such conditionalities can be done away with.

Commerce & Industry Minister Piyush Goyal is expected to represent India at the MC 12 in June.

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