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Burden of negotiation:Prospects for a permanent solution on subsidies are not that bright, says Prof. Abhijit Das of the IIFT.  

At the upcoming meeting of the World Trade Organisation’s (WTO) highest decision-making body, India will not agree to severe restrictions on its right to give price subsidies to farmers through the Minimum Support Price (MSP) to procure grains from them for food security purposes, according to highly-placed official sources.

The WTO’s Ministerial Conference is slated to take place at Buenos Aires in Argentina next month.

“Food security and protection of low-income and resource-poor farmers are top priority items for India [at the WTO meet], and we will hold our ground to protect our interests to the maximum extent possible,” an official privy to the developments said. Currently, an interim mechanism called the ‘Peace Clause’ is in place, per which WTO members had agreed not to challenge developing nations at the WTO Dispute Settlement Mechanism if they breached the cap of the product-specific domestic support (which is 10% of the value of production).

Peace clause

The ‘Peace Clause’ is available to developing nations, including India, till a permanent solution is found to public stockholding for food security purposes. Official sources said India would fight to ensure that at least the ‘Peace Clause’ is made the permanent solution, and will not accept any ‘terribly stringent or onerous’ conditions. However, the ‘Peace Clause’ is learnt to be difficult to invoke even in its current form because prior to using it, the country concerned will have to first admit that it ‘is breaching’ or ‘is about to breach’ the ceiling entitlement to give product-specific domestic support.

Difficult to invoke

Also, the ‘Peace Clause’ can be used only for public stockholding programmes that have been in existence on the date at which it was agreed upon at the Bali Ministerial Conference in December 2013, and not for new programmes on public stockholding for food security purposes.

According to Abhijit Das, head and professor, Centre for WTO Studies, Indian Institute of Foreign Trade, the prospects of an agreement on a permanent solution are not that bright due to three roadblocks. “First, the U.S. has not been engaging actively on the matter till recently, and if the U.S. does not give its nod, it will be difficult to arrive at a decision.

“Second, the European Union has tried to link the permanent solution with outcomes including stringent disciplines on domestic support given by developing nations,” he said.

Lastly, most WTO members are of the opinion that there should be a commitment on prohibition of exports from public stockholding saying such exports would be trade-distorting.

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