Govt assures support to India-China proposal at WTO against farm subsidies

Days after the contentious Doklam issue between India and China was resolved, the government has reiterated its support for a joint proposal by the nations at the World Trade Organization (WTO) against farm subsidies provided by rich nations to their farmers.

The countries had jointly submitted a proposal to the WTO back in July calling for the elimination — by developed countries — of the most trade-distorting form of farm subsidies.

On Thursday the Commerce and Industry Ministry said such support should be removed as a prerequisite for ongoing discussions on domestic support.

The fact that both nations have stuck to the proposal assumes importance in view of the ongoing negotiations for the upcoming 11th Ministerial Conference of the WTO to be held in Buenos Aires in December.

The joint proposal counters efforts by rich nations led by the United States, EU and Brazil to target the subsidies of the developing countries while letting their own economies retain their huge farm subsidies.

Reacting to the proposal, Brazil and the European Union have already come together on a full blown offensive at the WTO.

The Brazilian response — among the most prolific pushback against India's stance till now — had targeted all forms of subsidies apart from those under Minimum Support Price scheme. It also calls for a clampdown on exports of food stocks meant for public stockholding. This includes a grant for pest and disease control, and infrastructure and marketing services, among others.

The India-China proposal had targeted 'Aggregate Measurement of Support' (AMS) or 'Amber Box' support in WTO parlance.

Developed countries have more than 90 per cent of global AMS entitlements amounting to nearly $160 billion. On the other hand, most developing nations, including India and China, do not have AMS entitlements.

Apart from listing the most heavily and frequently subsidised products by the developed world since 1995, the paper reveals that subsidies for many of these items are over 50 per cent with some even having more than 100 per cent support.

"The joint paper revealed that developed countries, including the US, the EU and Canada, among others, have been consistently providing trade-distorting subsidies to their farmers at levels much higher than the ceiling currently applicable to developing countries." the Commerce Ministry said in a release.

Again, developing countries are forced to contain it within 10 per cent of the value of production.

Case in point, India provides a subsistence amount of about $260 per farmer per annum compared to over 100 times more in some developed countries. On this issue, India has informed the WTO that its farm subsidy did not go beyond the permissible limit between 2011-12 and 2013-14.

New Delhi has said that input subsidy, which includes those for fertilisers, irrigation and electricity, fell to $22.8 billion in FY2014 compared with $29.1 billion in FY 2011, a senior government official said.

These are part of the 'green box' or non-trade distorting subsidies that are allowed without limits for countries such as India which has millions of poor farmers.

Agri headache 

BS Reporter

Following India's agreement with the US on the issue in 2013, the Bali Ministerial Conference came up with the "peace clause" that permitted uninterrupted implementation of India's food security programme till a permanent solution was found.

This allows India to procure and stock foodgrain for distribution to the poor without being penalised by WTO members even if it breaches the 10 per cent subsidy cap prescribed by the multilateral trade body.

For a permanent solution, India has proposed either amending the formula to calculate the food subsidy cap of 10 per cent, which is based on the reference price of 1986-88 or allowing such schemes outside the purview of subsidy caps.

India and China are on opposite sides of the fence regarding investment facilitation.