There has been an ongoing debate over India’s stand at the WTO Ministerial Conference on the issue of public stockholding for food security purposes, including in this newspaper. There have been strong arguments on whether India’s stand is correct in the context of the subsidy phase out, in various sectors that the Modi government has been following over the past couple of years. But when this issue is viewed in the larger context of how trade negotiations have been conducted at multilateral forums and India’s role in groupings of like-minded countries, the matter assumes a different significance. Importantly, public stockholding for food security is not an issue of India alone. It is an issue that the G33 coalition has been advocating even prior to the Bali Ministerial of December 2013. The Group itself was created before the Cancun Ministerial and comprised of over 40 developing country members with defensive interests in agriculture.
The point that the coalition, with India being seen as the leading voice, has been making and demanding is the delivery of a commitment made by member countries, at Bali, to negotiate on an agreement for a permanent solution, for adoption by the 11th Ministerial Conference in 2017. The issue is of the WTO memberships commitment to earlier promises. If countries renege on this issue, then this could set a precedent for other such defaults on commitments by the membership, thereby weakening the very edifice of multilateral rule-making. This was seen as a quid pro quo for accepting a Trade Facilitation Agreement at Bali and, therefore, now needs a logical conclusion.
Importantly, as has been pointed out by many experts, the acceptance of a permanent solution does not, in any way, impact India immediately. Given the fact that in 2014 in Geneva, New Delhi insisted on the permanence of the Bali Peace Clause till a permanent solution is adopted, ensures that all the existing product-specific public stockholding measures used by India can easily continue for a few more years without even using the peace clause as New Delhi is within the acceptable band of support that can be provided by developing countries. Developing countries have a ceiling of domestic support of 10% of the value of production of the concerned crop, called the product-specific de minimis support. For India, the product-specific domestic support at present on rice is at about 5% and on wheat it is reported to be 0%. Thus, if Buenos Aires fails to deliver a permanent solution on the issue of public stockholding for food security purposes, India will remain unscathed, at least for the present.
However, while there is apparently no immediate commercial impact for India, there may be a need to broad base the discussion on why India should aggressively pursue the issue of public stockholding at the WTO and look at the possible implications.
First, while there is a General Council decision of the WTO at Geneva in 2014 that the Peace Clause will be allowed in perpetuity till a permanent solution is accepted, and the intention was reiterated at the Nairobi Ministerial of WTO in 2015, there is no guarantee that countries cannot renege on their promises. If member countries that have been founding members of the GATT and subsequently the WTO can go back on their promise to find a permanent solution by 2017, then there could be, at a future date, a possibility of countries clamouring to take developing countries to dispute on the issue of product-specific support if they fail to meet the strict obligations set at Bali.
Thus, there is an urgent need to get a legal backing to the Bali Peace Clause of 2013 and the subsequent Geneva decision of 2014 on the permanency of the Peace Clause. India is expected to start work in Geneva in the coming months towards seeking a change in the rules of dispute settlement to ensure that no country would be allowed to take any country to dispute for providing product-specific support even if it exceeds the limit prescribed by the WTO as long as it fulfils the requirements sought in the Bali decision.
Second, by moving away from the debate at WTO, India will be part of the membership that is willing to accept the inherent asymmetry in the multilateral system that seeks to contain developing countries from providing subsidies to its deserving population, while allowing developed countries like the US continue to provide product-specific subsidies to the extent of billions till very recently.
Studies show that in respect of 30 products, the product-specific support provided by the US was 10% or more of the value of production of the concerned product in at least one year during the period 1995-2014. In about eight products, the subsidies ranged between 57% (dry peas) to 215% (wool). In the EU, 43% received product-specific support of more than 10%, or more, of the value of production of the concerned product in at least one year during 2000-13. There were 14 products where the EU provided subsidies to the tune of over 60%. Three of these—white sugar, tobacco and silkworms—received over 100% subsidy. In case of rice, subsidy provided by the EU in a particular year during this period stood at 66%. Developed countries continue to subsidise agriculture using different provisions of the Agreement on Agriculture that permits such subsidisation.
Therefore, seeking a mandate to provide subsidies to meet food security requirements by developing countries like India seems fully justified.
In conclusion, the stand off at the Buenos Aires WTO Ministerial on public stockholding is not just about receiving a mandate for subsidising specific agricultural products by developing countries like India, but it is about countries keeping to their promise that was made at Bali. This is critical if the WTO has to remain a transparent and predictable rule-making body for global trade. India is not alone in seeking this outcome from Buenos Aires. Several countries share India’s position, though they have not been as aggressive as India in the public debate on this issue.