India is seeking certain legal backing to a peace clause to bar any nation from dragging the country, and others concerned, to the dispute settlement body of the World Trade Organisation (WTO) in case their subsidies for public procurement breach the ceiling mandated by the multilateral body, according to official sources. India’s key procurement programmes are already adequately protected for perpetuity from penal provisions under the peace clause, which was first secured at the WTO’s Bali ministerial in 2013 (its permanent status was affirmed in late 2014). The clause came into existence after all members had agreed not to drag the country to the WTO dispute mechanism even if its subsidy ceiling in food procurement is breached. Still, India is now trying to ensure this protection acquires the legal status so that even if a member nation reneges on its promise, the disputes settlement mechanism won’t consider its appeal.
The latest move comes following a deadlock over a permanent solution to the issue of public procurement for food security at the ongoing 11th ministerial conference, as the US retreated from its commitment at the Nairobi ministerial in 2015 to work towards finding a permanent solution on it by December 2017.
Importantly, India doesn’t even require the peace clause at this stage, as its subsidy for grain procurement is way lower than the stipulated cap. Its subsidy for rice procurement currently is around 5% of the value of production and wheat is almost zero, much lower than the 10% ceiling mandated by the WTO.
This has led to some analysts questioning India’s aggressive bid to secure a lasting solution that is better than the peace clause. However, with India seeking a leadership role of the G-33, comprising many African nations that have exceeded their subsidy ceilings or are on the verge of doing so, its commitment to such issues acquire significance. This is also because, on issues of India’s concern, the country needs support from other nations. Even China wants a permanent solution. Moreover, a lasting solution will offer the country leeway to design its future procurement programmes accordingly.
“We are fully protected because we insisted in 2014 that the peace clause, which was initially for a period of four years, is given for perpetuity till a satisfactory, permanent solution is agreed upon,” said an Indian official. “Now, our aim is to secure a legal status for this peace clause until a more satisfactory solution emerges.”