India Hopeful of Solution to Food Subsidy Issue at WTO

New Delhi
India Hopeful of Solution to Food Subsidy Issue at WTO
File - AP Photo/Anupam Nath
India Hopeful of Solution to Food Subsidy Issue at WTO

India is hopeful of a solution to the food stockpile issue at the WTO negotiations beginning next month at Geneva, which will also pave the way for signing of the trade facilitation agreement.

"WTO will convene in September and we expect it will engage on the issue of permanent solution on public stock holding for food security.

"There are proposals already there, there may be more proposals and we do believe that with focus and determination, we should be able to come to a satisfactory solution for public stock holding," a senior Commerce Ministry official said.

India, the official added, will continue with its stand on finding a permanent solution on the food grain stock pile issue, which according to New Delhi is pre-requisite for approving the trade facilitation agreement (TFA).

"India has placed all options before the WTO and things can be worked out within a month on the food security issue," the official added.

Commerce and Industry Minister Nirmala Sitharaman has said India will not compromise on the interest of poor farmers and consumers at the WTO and has sought complete resolution of the food grain stockpile issue, which is essential for unhindered implementation of the country's food security programme.

Justifying India's tough stand, which had led to collapse of the WTO Geneva talks on July 31, Sitharaman has said that without a permanent solution, public stock holding programmes in India and other developing countries will be hampered by the present ceiling on domestic support which is pegged at 10 per cent of the value of production and is wrongly considered as trade-distorting subsidy to farmers under existing WTO rules.

India had decided not to ratify WTO's TFA, which is dear to the developed world, without any concrete movement in finding a permanent solution to its public food stock-holding issue for food security purposes.

India has asked the World Trade Organization (WTO) to amend the norms for calculating agri subsidies in order to procure food grains from farmers at minimum support price and sell that to poor at cheaper rates without attracting any penalty in the WTO.

The current WTO norms limit the value of food subsidies at 10 per cent of the total value of food grain production. However, the support is calculated at the prices that are over two decades old.

India is asking for a change in the base year (1986-88) for calculating the food subsidies. It wants the change to current base year.

There are apprehensions that once India completely implements its food security programme, it could breach the 10 per cent cap. Breach of the cap may lead to imposition of hefty penalties if a member country drags India to the WTO. 

On the question whether the 'Peace Clause' exists in the absence of adoption of protocol on TFA, the official clarified that "it is available till a permanent solution is found by the WTO. It could not be withdrawn."

Under the peace clause, a WTO member gets immunity against penalty for breaching the food subsidy cap. It would also allow India to procure food grains at the minimum support price and sell it at subsidised rates through the public distribution system.

"The ball is in the court of the developed countries (mainly the US and Europe). India is not at all against the TFA but it should be signed only with the permanent solution on the food grain stockpiling issue for food security purposes," another official said questioning "how can subsidy to poor farmers are trade distorting? How can one compare the current prices with 1986-88 prices.''

The official said that the WTO rules now needs to amended in the area of the food security "to make food security look real in the developing countries."

Although the TFA is not a development issue, as it would not help those countries which are major importers, India is not backing away from that.

On the reports that implementation of the TFA would boost the global GDP by USD 1 trillion, the official said there are no authentic reports which justifies this figure.

The officials also clarified that India is not isolated in the WTO on the food security issue as several of the African and Asian nations are running similar programmes.

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