In its effort to get an agreement on the G33’s food security deal at the WTO (World Trade Organization) Bali ministerial, India might find an unlikely support in France, the only nation in the rich countries' club who is supporting the developing countries’ stance.
In a paper prepared by a French think-tank – CIRAD – it has argued for the need to correct WTO rules for public stocks. The report stresses on the fact that if the current global norms under WTO on public stocks remain unchanged then it will lead to unfairness, bad incentives and price distortion.
The question of public stock-holding for food security will be at the center of the next WTO negotiations in Bali which is taking place from December 3-6, 2013. India, along with other emerging and developing countries have stated that it will not agree to a deal on trade facilitation, which is being pushed by rich countries that seeks to cut transaction cost along international borders for smoother flows of goods, until and unless they agree to conclude the discussion on the food security proposal.
This proposal was originally mooted by the G33, a grouping of all emerging nations in 2008 and was included in the December 2008 negotiating text during a ministers meet.
The December 2008 text states: “acquisition of stocks of foodstuffs 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 have been demanding since then that some of the subsidies that are given as part of the procurement which is done for public stockholding from poor and marginal farmers should not be regarded as a ‘prohibited subsidy’ or ‘amber box’ subsidy by the WTO. Presently, these are prohibited under WTO norms.
The report highlighted that the current WTO rules on public stocks overestimate the 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,” the report prepared by Franck Galtier of CIRAD stated.
Thus, the report said that a change of rules is required to derive a new mechanism of calculation with a more “realistic measure” the developing countries, like that of India, provides for domestic support.
While the US is completely against such a proposal, the European countries are still ready to discuss the issue and find out an amicable solution to the problem. This is because the US feels, any agreement on this issue will give unprecedented flexibilities to China as gives much more subsidies compared to India in terms of numbers and their procurement levels are much higher.
An agreement on this proposal is extremely crucial for India as 99 per cent of its farmers fall under the ‘low-income or resource-poor’ category. Moreover, Indian government is also concerned of the fact that in public procurement it is soon going to overshoot the ‘De Minimis’ level, the threshold beyond which subsidies cannot be given under global trading rules.
