Amid mounting protest, India seems to have finally agreed to a four-year interim measure, or a ‘peace clause’, that will do away with the cap on food subsidies for farm support in developing countries under the World Trade Organization norms.
A decision on this will be taken next week during the ninth Ministerial Conference in Bali, Indonesia.
According to the final draft of the negotiating text circulated by WTO Director-General Roberto Azevedo among trade ministers of the 159 member countries on Wednesday night, on public stockholding for food security purposes, a developing country like India can provide subsidies for farm support even if those exceed the permissible 10 per cent cap.
However, the interim measure has become extremely controversial, especially in the wake of the government’s recently-announced National Food Security Act, 2013.
Political parties, farmers and some sections of the civil society are vehemently opposing this and demanding a permanent solution.
To continue to give subsidies within their domestic constituencies in future as well, it is crucial for India and other developing countries to get the subsidy regime changed under the WTO Agreement on Agriculture.
In the draft text, the members have also agreed to seek a permanent solution, as demanded by India, before 2017, when the 11th Ministerial Conference takes place.
But that has been accepted only as a post-Bali agenda.
“The very fact that the need for a permanent solution has been accepted by the members is a big achievement for India,” a senior official involved in the talks, asking not to be named, told Business Standard.
However, despite WTO agreeing to a permanent solution, making all members agree and deliver on their commitments is going to be difficult.
So, the prospects of amending the AoA on subsidies have been delayed further.
Also, the proposed ‘peace clause’ is not completely immune to challenges and can always be disputed under the Agreement on Subsidies and Countervailing Measures.
“The clause in its current form is not in our interest.
“We cannot compromise on the livelihood of millions of subsistence farmers in India. “We cannot accept any limitation on our food security programme.
“The much-hyped food security for Indians will eventually come to a nought in just four years if this peace clause is acceded to,” said Arun Jaitley, member of the Bharatiya Janata Party and the leader of Opposition in the Rajya Sabha.
In a letter to Shanta Kumar, chairperson, Standing Committee on Commerce, Pradeep Mehta of CUTS International, who also sits on a high-level panel at WTO, has said the commitments under FSA are enormous, but these cannot be considered ‘trade-distorting’