Economy

Amiti Sen | New Delhi, June 3 | Updated on: Jun 03, 2022

Argue that the proposal will allow developing members to stock up food grain without limits

The US, the EU, the UK and some food exporting nations have rejected the proposal put forward by India and other members of the G-33 group, Africa Group and the ACP (Africa, Caribbean, Pacific) group at the WTO, on a permanent solution for public stock holding including re-calculating subsidy ceilings for MSP programmes. 

“The rejection of the proposal, which came up for discussion at a special session on public stock holding at the WTO on Thursday, was on the ground that the proposal would allow all developing members to stock up food grain without limits in a non-transparent manner with no legal consequences,” a Geneva-based official told BusinessLine.

In a joint proposal submitted to the WTO’s Committee on Agriculture earlier this week, the G-33, ACP and the African Group had insisted that a permanent solution to public stock holding should be reached at the forthcoming WTO Ministerial Conference (MC 12) starting in Geneva on June 11.

It is important for India to negotiate a permanent solution as early as possible because although it negotiated a peace clause at the Bali Ministerial in 2013 and later, which 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.

Facing complaints

New Delhi has already invoked the peace clause once for its MSP support for rice, as its subsidies for rice have exceeded the WTO prescribed ceiling of 10 per cent of value of rice production, but it is facing complaints from many developed nations for allegedly not fully meeting notification requirements specified under the clause.

Members who have objected to the joint-proposal on public stock holding, which includes the Cairns group comprising New Zealand, Canada, Australia, Paraguay, Uruguay, Costa Rica and Mexico, complained that the proposal was not restricted to public stock holding and sought changes in AoA rules such as excluding certain measures from calculation of Aggregate Measurement of Support (AMS) subsidies and also changing the external reference prices (ERP). 

“Members also expressed disappointment that the proposal has been submitted so late, leaving no time for them to go through all the technicalities and work out a consensus,” the official added.

The joint proposal had suggested that domestic support provided by a developing country member for public stockholding programmes should be considered as compliant with WTO’s AoA rules and not subject to reduction commitments. 

It added that where such programmes included acquisition and release of stocks of foodstuffs at administered prices, the AMS (agriculture subsidies) should be calculated based on the actual quantity of foodstuffs (as opposed to the entire eligible production) acquired at administered prices. 

Moreover, the submission stated that ERP for calculating the subsidy element should not be pegged to 1986-88 prices as it leads to inflated subsidy calculation because existing international prices are much higher. Instead, it should either be the three-year average price based on the preceding five-year period excluding the highest and the lowest entry for that product or adjusted for excessive inflation as per the methodology, the proposal said.

“Some members pointed out that the WTO Director General’s and the chair’s draft text, which proposed that a work programme on public stock holding should be agreed to at MC12, was a more realistic outcome,” the official said.

Published on June 03, 2022