FOOD SECURITY

GUEST COLUMN: India should blame itself for WTO stalemate

TRADE-WTO/ Activists from India protest against the 11th World Trade Organization's ministerial conference inside the hotel where the conference is held in Buenos Aires | Reuters

It has all been the outcome of India’s lack of assertiveness at the WTO

A stitch in time saves nine. That is exactly what India failed to do. The deadlock over a permanent solution to the issue of public procurement of food is the outcome of repeatedly postponing a legal protection measure that India needed the World Trade Organisation (WTO) to put its stamp on.

If only India had acted—when it was required to act—there would have been no room for any “deep disappointment” at this stage.

At the root lies the temporary reprieve granted under the ‘Peace Clause’ provision that restricts any country to challenge India’s procurement of staple foods for its food insecure population. The ‘Peace Clause’ that was affirmed in July 2014 does provide India an exemption for all times to come, but will for all practical purposes ensure that a sword of Damocles keeps on hanging for perpetuity. Finding a permanent solution to the critical issue was therefore a necessity.

The United States has refused to oblige. It is increasingly under pressure from its 30 farm commodity export groups, which have time and again, expressed concerns at India’s “price support programmes that have more to do with boosting farm incomes and increasing production than feeding the poor”. The US is, therefore, keen to see that India dismantles its food procurement operations or is forced to freeze the procurement prices so as to keep it within the prescribed limits. A low price to Indian farmers will be a serious disincentive resulting in a short-fall in domestic production. The US farm export groups see a huge market here. The US has nothing against feeding the poor under the National Food Security Act (NFSA) but want India to source supplies from the US instead.

In other words, it takes away India’s right to buy food for the disadvantageous populations from its own resource poor small and marginal farmers at the Minimum Support Price (MSP). Nearly 99.15 per cent of India’s 600 million farmers fall in the category of resource poor.

Since India has already exceeded the limit prescribed under the Aggregate Measurement of Support (AMS) for developing countries that treats the procurement price beyond the permissible de minimis level of 10 per cent of the total value of production as agricultural subsidy, India is under pressure to prune its procurement prices. Although India claims that it is still far away from breaching the 10 per cent level, when it computes the agricultural subsidy in the terms of US dollars, the US also knows that when presented in terms of Indian rupees, India has already breached the de minimis level by a whopping 24 per cent in case of paddy and is fast inching the threshold level for wheat.

These US farm commodity export groups, which ironically receives monumental federal support every year, have questioned the need to provide any relaxation in current discipline even on a temporary basis. Accordingly, such an exemption will result in more subsidy outgo and result in further damage to US trade interests. There is no denying that the US had more than doubled its subsidy from $61 billion to $130 billion between 1995 and 2010. Further, the US-based Environmental Working Group has worked out that the US paid a quarter of a trillion dollars in subsidy support between 1995 and 2009. These subsidies have not been reduced in the subsequent farm bills, which every five years makes a budgetary provision for farm support programme. Most of these subsidies are presented under the Green Box in WTO parlance that does not require any cuts to be made. India’s food procurement comes under the amber box provisions and requires to be drastically pruned.

This was of course well-known. But at the Bali WTO Ministerial in 2013, the then Indian Commerce Minister Anand Sharma initially had insisted that the Trade Facilitation Agreement, a treaty that the developed countries were pushing aggressively, be taken simultaneously with public stockholding of food in India (along with some other developing countries under the G-33 banner).

No trade facilitation without food security proposal. But at the final stages, for some strange reasons, Anand Sharma softened his stand and agreed to support the demand for trade facilitation. Although the WTO director general Roberto Azevedo had appreciated India’s position on food security and had agreed to work out a permanent solution in the next four years, by the XI WTO Ministerial in Buenos Aires in Dec 2017, I see no reason why India should have given up so easily.

Anand Sharma had made the right noises in the media but when the final moment came, he readily signed the trade facilitation agreement. All he could wrest in the bargain was a four year 'Peace Clause' for the food subsidy issue that is crucial for not only India's food security but also food self-sufficiency.

The deadline for bringing each member country on board for a Trade Facilitation Agreement was July 31, 2014. The NDA government had taken over, and like it always has been, India made the right kind of noises but at the end signed on the dotted line.

“India has made it clear that state-funded welfare schemes for the poor are non-negotiable, and it is willing to take the blame for delaying WTO’s Trade Facilitation Agreement rather than hurt the interests of small farmers,” the Hindustan Times (July 21, 2014) reported. India, in fact, was threatening to stretch the deadline for launching a new trade facilitation treaty to December 31, 2014, extending it by six months so as to seek an early solution to India’s food security needs in the meantime. Nothing like that happened. Empty warnings remained unheeded.

Indian trade officials knew this was the only way to seek a permanent solution. In the same news report, trade officials were quoted as saying: “India’s concern is that once TFA is implemented, none of the developed countries is likely to come back to the negotiating table to discuss food subsidy or any other non-binding outcome of the Bali Ministerial,” Hindustan Times reported.

Indian went to the Nairobi WTO Ministerial 2015, led by the then Commerce Minister Nirmala Sitaraman, affirming to seek a permanent solution for public stockholding programmes and a special safeguard mechanism (SSM) to protect small farmers from import surges. Again, loud noises before the conference, but at the end failing miserably to emerge out with some concrete outcomes. A news report in Mint (December 21, 2015) summed up the disappointment: “In the final analysis, it is clear that India failed in its objectives to secure credible outcomes on its demands for SSM, permanent solution for public stockholding programmes for food security... Perhaps this is the first time that India left a WTO ministerial meeting so diminished.”

I am, therefore, not surprised to see India returning back from the XI WTO Ministerial empty handed, without a permanent solution for the critical issue of food security.

It has all been the outcome of India’s own doing.

(The author is a food policy analyst)

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