More food for 'multilateral' thought

The G33's food security proposal is likely to be a contentious issue with developed countries, especially the US, in the upcoming Bali Ministerial meet

The agenda for the Bali Ministerial meeting of the World Trade Organisation (WTO) is warming up. The three main deliverables that it hopes to deliver are: food security as proposed by the G33 grouping; trade facilitation that the developed world is keen to pursue; and the developmental agenda that would benefit the least developed nations.

What will be important is to ensure that a balance is arrived between these three issues so that all member nations find enough meat to support the multilateral negotiations for trade liberalisation under the WTO in the post-Bali process.

One critical area will be the food security proposal of the G33 countries, which also includes India. The proposal states that the procurement of food and its distribution, which benefits the resource-poor farmers, should not be counted as a prohibited or actionable subsidy. The US, however, disagrees. The American position is surprising since food stamps have been an integral part of the US food security strategy. Several other countries, including China, Philippines and Indonesia, have schemes to support the overall food security issue.

Reports by Bridges from Geneva state that the Chair of the WTO agricultural negotiations, New Zealand Ambassador John Adank, is looking at various options to bridge the divide between the G33 proposal and the position advocated by countries like the US.

The options, reportedly, include exploring whether the WTO member countries could agree to exempt a set of developing country farm programmes from subsidy limits; whether countries could agree to reiterate a commitment not to bring legal challenges to minimally trade-distorting support programmes under a possible "peace clause"; or agreeing to greater flexibility subject to certain conditions, such as better targeting of beneficiaries.

A smaller group of countries - the US, the European Union (EU), Australia, India, Pakistan and China - are now looking to find any middle ground that satisfies the needs of both sides. The smaller group has, reportedly, had some positive discussions and they are looking at ways to bridge the current divide.

It is understood that some developing countries, including India, have conveyed their intention to move forward on the trade facilitation programme only when the food security issue is settled. India has been keen on pushing this proposal forward in Geneva, since it is concerned that the food security Bill - which is awaiting Parliament approval, does go through - will take it close to the de minimis of 10 per cent of the country's value of production, which is set for the extent of subsidy a developing country can provide under the WTO rules. One of the possible solutions would be to take up the de minimis levels to a higher percentage.

From an Indian perspective, it will be important to push the food security Bill to ensure that the resource-poor farmers receive compensation through an administered price mechanism.

The EU and the US have been at the forefront in providing agricultural subsidies to farmers. In 2010, the US had provided trade-distorting support of $4 billion by supporting agricultural supporters. Non-trade-distorting support by the US totalled $120 billion for the same year. The EU had provided trade-distorting support worth Euro 9 billion in 2010, and about Euro 64 billion in non-trade-distorting support.

The EU had also provided Euro 5 billion towards production limiting programmes that help keep prices of some commodities high in the global markets.

The developmental agenda for the least developed countries becomes important, as the Doha Round was expected to help drive equity in world trade. Member countries need to get together to ensure that they are able to find a right mix of proposals that will benefit the least developed countries substantially.

The Bali Ministerial is billed to be a stepping stone for the revival of the multilateral process of trade negotiations, which has been dented after the Doha Round has failed to conclude in over 10 years of negotiations. It will be important for member countries to make concrete attempts to drive consensus on contentious issues. There is a lot at stake for the growing tribe of member countries in the WTO. The next few months of the run-up to the ministerial meet in December are critical to ensure that multilateralism prevails.

The writer is Principal Adviser at APJ-SLG Law Offices