PMO sets January 15 deadline for quantification of agriculture subsidies

The Prime Minister’s Office (PMO) has sought quantification of all subsidies and support measures…

Chhattisgarh, food security, food security law, public distribution system, food security scheme, PDS

The Prime Minister’s Office (PMO) has sought quantification of all subsidies and support measures extended to India’s farm sector under the World Trade Organization’s (WTO) Agreement on Agriculture.

“It would be useful if this exercise is completed in two months time, i.e. by 15.1.2015”, a letter from the principal secretary in the PMO, Nripendra Misra, has said, adding that “this quantification is a first step in understanding the extent of support that this sector needs”.

The letter, dated November 17 and accessed by The Indian Express, is addressed to the secretaries of the departments of commerce, agriculture, food & public distribution, fertilisers, and expenditure.

The proposed exercise’s timing is significant, considering that the WTO’s General Council, its highest decision-making body, on Thursday agreed on striving for a “permanent solution” to the issue of public stockholding for food security purposes by December 2015.

This agreement — also allowing for the implementation of a global trade facilitation pact that obliges WTO members to streamline their customs procedures for expediting clearance of goods at ports — will now set the stage for protracted negotiations on the type and extent of subsidies permissible under national food security programmes.

India, in its most recent filing before the WTO on September 10, had submitted that its total domestic support for agriculture was $56.13 billion in 2010-11, which included $13.81 billion towards public stockholding for food security purposes. India, until now, has been maintaining that its farm sector subsidies are exempt from any reduction commitments under the WTO, while claiming “Green Box” protection with regard to public food stockholding.

Those opposing this stance have, however, contended that food security-linked stockholding programmes are trade-distorting when they involve procurement of grain from farmers at above market prices.

They have, accordingly, demanded that any such programmes shouldn’t end up affecting prices and volumes on world markets — especially through subsidised exports from public stocks.

The PMO letter has asked the concerned departments to “study the existing support measures for agriculture, examine the possibilities that are there under the Agreement on Agriculture for promoting agriculture, classify all the ongoing support activities in the context of the various permissible and regulated activities under the WTO, and suggest possible changes and improvements that may be needed in future”.

The agreement reached at Geneva on Thursday provides for a “peace clause” that will remain in force until a permanent solution to the public stockholding issue is worked out. During this period, member-countries cannot drag each other to the WTO’s dispute settlement body for any alleged breaching of farm subsidy limits on account of food security-linked stockholding.

The original “peace clause” adopted at the WTO’s Bali ministerial conference last December was only temporary until 2017. But after India’s strong intervention, the WTO General Council has decided on making it open-ended, pending the finding of a “permanent solution”.
At the same time, the Council has agreed to push for a permanent solution by the end of 2015.

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