India's current aggregate measurement support must not lull us into a state of complacency as the scenario may change, putting us in a vulnerable zone. Hence, the focus has to be on changing the rules of the game to make them fair and equitable
The 11th World Trade Organisation (WTO) ministerial held in Buenos Aires during December 10-13, 2017 failed to produce even a declaration — a bare minimum for any such conference.
The reason for the failure was diametrically opposite stance taken by the US and India. While the latter pressed for finding a permanent solution for public stockholding programmes for food security — the most contentious issue under the Doha Development Round (DDR) — the former did not even allow it to be put on the table. This was not unexpected as earlier in November 2017, during meetings held at the WTO headquarters in Geneva, to discuss an initial draft declaration, the US had opposed the very use of the word ‘development’. Even while dumping the development agenda, it brought to the table, new issues, such as investment facilitation, disciplines for micro, small and medium-sized enterprises and e-commerce (in July 2017, developed countries had submitted proposals on a new ‘holistic’ work programme). This was rejected by India.
Meanwhile, 70 countries signed a declaration to ‘informally’ discuss ‘new issues’ which gives developed countries an opportunity to crystallise ideas with an eye on the next ministerial in 2019 — the intent being to seek a negotiating mandate. Even as India has returned empty handed, Union Minister of Commerce and Industry, Suresh Prabhu, who led the Indian delegation, is unperturbed and feels that we are in a safe zone. His optimism stems from the fact that in view of the developing countries having got ‘an interim relief’ (‘peace clause’ in WTO jargon) till a ‘permanent’ solution is found, the relief would be available perpetually, irrespective of whether the solution is found or not. Prior to the ministerial, this perception had led Prabhu to observe that “our earlier effort to insist on a permanent solution was a mistake” and that “he was not keen to pursue it in Buenos Aires”.
No wonder, they were emboldened to toughen their stance, putting India on the back foot. Under the ‘peace clause’ agreed to in the ninth Bali ministerial (2013), if a developing country gives aggregate measurement support (AMS) (WTO nomenclature for subsidies) in excess of 10 per cent of its agricultural Gross Domestic Product, no member will challenge this until 2017, when the WTO would look for a permanent solution to address their food security concerns.
The peace clause came with a plethora of conditions viz, submission of data on food procurement, stockholding, distribution and subsidies (including their computation) etc. These also included establishing that subsidies are not ‘trade distorting’, which is a daunting task. Moreover, it did not permit inclusion of new schemes/products. In the WTO General Council meeting in Geneva (July 31, 2014) India had insisted on a time-bound action plan to find a permanent solution to be executed before the end of 2014 co-terminus with approval of Trade Facilitation Agreement (TFA). In December 2014, the council approved ‘extension of peace clause till a permanent solution is put in place’ even as TFA got the green signal. This is where we committed a mistake. India neither stuck to its demand for a permanent solution nor asked for dropping of the conditions appended to the ‘peace clause’. So, the Damocles sword hangs!
TFA being of great importance to developed countries, India must not have given approval to it without seeking in return, a permanent solution on food security. True, it did well by linking the two in July 2014 meeting of WTO-GC. But why was this stance abandoned midstreamIJ Had this been carried forward (that time around, Prime Minister Modi had established a good rapport with the then President Obama, which could have been leveraged to our advantage), we would have got a permanent solution in December 2014 itself. The 10th ministerial in Nairobi (December 2015) merely stated that “negotiations on the subject shall be held in the Committee on Agriculture (CoA), which will be distinct from ongoing agriculture negotiations under DDR”. That took us nowhere. And now, at Buenos Aires, the US has simply dumped it.
Meanwhile, Prabhu has convened a so-called ‘mini-ministerial’ in Delhi of like-minded members of WTO. The effort should be to evolve a ‘practical’ strategy instead of adumbrating open ended support for public stockholding programme without any ceiling , on the lines of G33 proposal submitted in July, 2017 (WTO, Geneva). AMS includes ‘product-specific’ subsidies and ‘non-product specific’ viz. subsidies on agricultural inputs viz., fertilizers, seed, irrigation, electricity etc. The ‘product-specific’ subsidy is excess of minimum support price (MSP) paid to farmers over international price — or external reference price (ERP) — multiplied by quantum of agri-produce whereas ‘non-product specific’ subsidies is money spent by government on schemes to supply agricultural inputs at subsidised rates. Under the Agreement on Agriculture (AoA), for computing ‘product-specific’ support, ERP was frozen at 1986-88 level. With this, comparing current MSP with ERP of three decades before inevitably results in ‘artificially’ inflated subsidy. So, the 10 per cent ceiling is bound to get exceeded showing developing countries as violators even when they are not if current ERP is used.
So, India should insist on comparing MSP with current ERP to arrive at AMS. In short, WTO should be goaded to take a re-look at AoA to remove these flaws. This will automatically take care of our concerns. The developed countries would be more amenable to these changes instead of open ended exemption which they are prone to rejecting. That India’s current AMS is below the 10 per cent threshold must not lull us into a state of complacency as the scenario may change putting us in a vulnerable zone. Hence, the focus has to be on changing the rules of the game to make them ‘fair’ and ‘equitable’.
(The writer is a freelance journalist)
