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A draft text ahead of the World Trade Organization’s (WTO’s) 13th ministerial conference (MC13) has proposed to “agree and adopt” a permanent solution to public stockholding for food security until the next ministerial meeting.
This means a permanent solution India has been negotiating hard for may be pushed back by another two years, since the conference is generally a biennial meet. The other option mentioned in the draft is to adopt a permanent solution in MC13, expected to start from February 26 in Abu Dhabi.
The outcome, however, will be clear after the final round of talks this week.
Meanwhile on Sunday, G33 group of developing countries in a statement urged all WTO member nations to make a concerted effort to agree and adopt a permanent solution on the matter since public stockholding for food security purposes is of ‘critical importance’ to developing countries.
“The G33 co-sponsoring members reiterate the importance of the proposal submitted with the African Group and the African, Caribbean, and Pacific Group, and invite other members to engage constructively with the elements contained therein, as a basis to achieve outcome on public stockholding for food security purposes in MC13,” according to the G33 ministerial statement on agriculture trade negotiations.
The ministerial conference, the highest decision-making body of the WTO, can take a call on all matters within the ambit of multilateral trade rules based on a consensus.
Indian officials had earlier said one of the top agendas for New Delhi was to fast-track its long-pending demand for a permanent solution to the issue of public stockholding, agreed upon over a decade ago. They had also said India would not engage in other agriculture discussions until a permanent solution for public stockholding was reached.
Through its public stockholding programme, India procures food grains, such as wheat and rice, at a predetermined price and then subsidises it through the public distribution system -- the policy tool used by the government to meet food security.
India has found support from a group of developing nations at the WTO, including African ones, on this issue. However, developed countries, including the United States as well as the 19-member Cairns Group, view this as a subsidy for farmers and as a distortion of trade.
A permanent solution is crucial since some developed countries have been questioning India’s minimum support price (MSP) programme for food grains, particularly rice, since the subsidy has breached the suggested limit under the WTO trade norms thrice.
Under trade norms, a WTO member’s food subsidy bill should not breach the limit of 10 per cent of the value of production, based on the reference price of 1986-88. Subsidies over and above the prescribed ceiling are seen as trade-distorting.
Apprehending that full implementation of the food security programme may result in a breach of the WTO cap, India has been seeking amendments to the calculation formula. As an interim measure, WTO members at the 2013 ministerial meeting had agreed to put in place a mechanism popularly called the “peace clause” and committed to negotiating an agreement on a permanent solution at the 11th ministerial meeting at Buenos Aires.
India has invoked the peace clause under WTO norms to protect its food procurement programme against any action from member nations in case the limit is breached.
According to Delhi-based think tank Global Trade Research Initiative (GTRI), reaching an agreement on public stockholding is difficult because developed countries like the US and Cairns Group argue India’s programme could distort trade.
“The US suggests a gradual approach, dealing with public stockholding alongside other issues, and increasing transparency in such programmes. The MC13 might not resolve the issue, showing the conflict between developing countries wanting to protect food security and developed countries pushing for free trade,” the GTRI had said in a report last month.
In a letter, the Indian Coordination Committee of Farmers Movements (ICCFM) urged Commerce and Industry Minister Piyush Goyal to resist any pressure to weaken the public stockholding mechanism and fight for a permanent solution that considers the needs of developing countries like India to ensure food security for millions of its needy people.
“We are deeply concerned about the potential outcomes at MC13 that could impact our livelihoods and the future of Indian agriculture. We urge you to safeguard our interests and ensure that the decisions made in Abu Dhabi protect our farmers, our food security, and our sustainable agricultural practices,” according to the letter.
The ICCFM is a network of farmers’ organisations in India, comprising farmers’ movements from Uttar Pradesh, Haryana, Punjab, Himachal Pradesh, Madhya Pradesh, Jharkhand, Chhattisgarh, Bihar, Karnataka, Tamil Nadu, Kerala, and Maharashtra.
S Chandrasekaran, a trade policy analyst, said India faced production constraints in grains due to climate change. “MSPs and public stockholding are most necessary to keep farmers producing the grains and preserve food security. The clear definition of trade-distorting subsidies is imperative to take the subject to a logical conclusion," Chandrasekaran said.
