India needs to continue its fight for a permanent solution to the problem of public stockholding for food security at the WTO’s forthcoming 13th Ministerial Conference, as the onerous conditions attached to the ‘peace clause’ leaves it open to possible dispute in the future, according to trade experts.

Moreover, the peace clause only extends to the MSP programmes that existed prior to 2013, including rice, wheat, pulses and some coarse grains, and programmes covering new crops will not be protected.

“The peace clause is ridden with very difficult conditions and onerous notification requirements. It is limited to programmes in existence before 2013, also only to traditional staples. This severely limits the policy options for India to protect its farmers, leaves it open to counter questions and even disputes. This is the situation not only for India but other developing countries as well,” according to Ranja Sengupta, Senior Researcher, Third World Network.

Seeking solution

India and about 80 other developing countries, including African nations, the ACP group and the G33 coalition of developing nations, are seeking a permanent solution to the issue of public stockholding for food security as the present rules limit subsidies for food procurement to 10 per cent of the value of production.

While the Bali Ministerial decision of 2013 had allowed developing countries a peace clause invoking which they can breach the WTO prescribed agriculture subsidy limit without the risk of legal action from other members, but these nations are seeking a permanent solution so that it gets included in the Agreement on Agriculture and the onerous conditions attached to it are lightened.

While officials in the Commerce Department say that the peace clause protects India against all legal actions related to breaching of food subsidy limits, experts caution that if other members could prove that the attached conditionalities (which not only include numerous notification requirements but also vague references such as not harming the food security of other vulnerable countries) are not being met, there could be trouble.

According to foreign trade expert Abhijit Das, India requires a permanent solution to PSH also because the exact nature of some of the obligations in the peace clause needs to be clarified. “Attempts are also being made by agriculture export power houses to gradually chip away at the peace clause and make it less effective. These problems need to be addressed through the permanent solution. In addition, a permanent solution that amends the Agriculture Agreement will provide more legal certainty than the peace clause,” he said.

India has already made it clear at the WTO that it will not budge on its demand for a permanent solution to the problem of public stockholding for food security at the WTO’s 13th Ministerial Conference (MC13) in Abu Dhabi this month-end and will negotiate in other agriculture-related areas, such as domestic support and export restrictions, only after it secures an agreement on the vexed issue.

The US and the Cairns group, which includes agriculture produce exporting countries such as Australia and New Zealand, have been arguing that public stockholding at administered prices gives countries such as India an unfair competitive advantage in trade, contradicting the WTO’s principles of open and fair trade.

New Delhi has, however, said that the food procured through its MSP programme was only used to feed the poor and none of it was exported.