Sitharaman urges WTO chief to find early solution to food stock issue

High subsidies distort prices, makes farmers vulnerable when the products hits domestic markets

Commerce Minister Nirmala Sitharaman has urged the WTO chief to "vigorously" follow the efforts of the member countries for finding the solution to the issue of food stockpiling.

The issue was raised by the minister during her meeting with WTO Director General Roberto Azevedo at Geneva.

She also mentioned the kind of outcomes India would like to see at the upcoming eleventh ministerial conference (MC11), the highest decision making the body of the WTO, in Argentina in December.

"She particularly stressed that the MC11 outcomes must include a permanent solution on public stockholding (PSH) for food security purposes on which there is a ministerial mandate," the ministry said in a statement today.

Sitharaman also urged Azevedo "to follow up vigorously to support the efforts to reach finality on PSH and the agricultural Special Safeguard Mechanism (SSM)".

Further, the minister stressed that any attempts at seeking outcomes on new issues such as e-commerce and investment facilitation should "not" be at the cost of other long pending issues on the agenda of the Doha Round.

The new issues which are being pushed by developed world include investments, competition, labour, government procurement, environment and global value chains.

A permanent solution to the issue of food stockpiling is important for smooth implementation of India's food security programme.

As per the global trade norms, a WTO member country's food subsidy cap should not breach the limit of 10 per cent, which is based on the reference price of 1986-88.

There are apprehensions that full implementation of food security programme may breach this cap. So India wants amendments in the formula to calculate the food subsidy cap.

There is a peace clause currently according to which no country can ask WTO to take action against a country that breaches the 10 per cent cap. This clause is there till a permanent solution is found for the food stockpiling issue.

This has enabled India to continue procurement and stocking of foodgrain for distribution to poor under its food security programme without attracting any kind of action from WTO members even if it breaches the 10 per cent subsidy cap as prescribed by the multilateral trade body.

SSM is a toll demanded by developing countries, including India, to support poor farmers from the sudden surge in imports.

Several developed countries give massive subsidies to their farmers and in such a case SSM would help India in protecting the farmers.

High subsidies distort prices and makes Indian farmers vulnerable when the products hits the domestic markets.