India's WTO food security stance gets French think-tank support

The European countries are ready to discuss the issue and find out an amicable solution to the problem

In its efforts to secure consensus on the G33’s food security deal at the World Trade Organization (WTO) Bali ministerial, India might find an unlikely supporter in France, the only nation in the rich countries’ club that supports the stance of developing countries.

The G33 is a group of emerging nations.

A paper by French think-tank CIRAD has argued for the need to correct WTO rules for public stocks. The report stresses on the fact that if the current global WTO norms on public stocks remain unchanged, it would lead to bad incentives and price distortion.

The question of public stock-holding for food security would be at the centre of the next WTO negotiations in Bali, scheduled for December 3-6 this year. India, along with other emerging and developing countries, has stated it wouldn’t agree to a deal on trade facilitation pushed by rich countries that seeks to cut transaction cost along international borders for the smooth flows of goods until and unless those countries agreed to conclude discussions on the proposal for food security.

The proposal was originally mooted by the G33 in 2008 and included in the December 2008 negotiating text at a ministers’ meeting. The December 2008 text states, “Acquisition of stocks of foodstuff by developing country members with the objective of supporting low-income or resource-poor producers shall not be required to be accounted for in the AMS (aggregate measurement of support).”

India, along with other developing countries, has been demanding some of the subsidies given as part of the procurement for public stockholding from poor and marginal farmers shouldn’t be regarded as a ‘prohibited subsidy’ by the WTO. Currently, these are prohibited under WTO norms. The CIRAD report said current WTO rules on public stocks overestimated domestic support for agriculture substantially.

“The current way to calculate the contribution of public stocks to AMS is biased. It strongly overestimates the real support provided to farmers through public stocks,” said the report, prepared by CIRAD’s Franck Galtier.

It added a change of rules was required to derive a new mechanism to calculate, with a more “realistic measure”, what developing countries such as India provided towards domestic support. The US is completely against such a proposal, as it feels any agreement on this issue would give unprecedented flexibilities to China, as it gives much more subsidies compared to India.

Also, its procurement levels are higher. The European nations are ready to discuss the issue and arrive at an amicable solution.

An agreement on this proposal is crucial for India, as 99 per cent of its farmers fall under the ‘low-income or resource-poor’ category. The Indian government is concerned in public procurement, it would soon overshoot the ‘De Minimis’ level, the threshold beyond which subsidies cannot be given under global trading rules.