India has under-reported the massive support it offers to its wheat and paddy farmers to the World Trade Organisation (WTO) and its sops far exceed the permissible limit, the US has told the multilateral body. India had notified to the WTO market price support (MPS) of Rs 12,001.6 crore for rice in 2013-14, which amounts to 5.45% of the value of production, while the US has claimed that the apparent support was as much as Rs 1,78,018.5 crore, or 76.9% of output value. Similarly, in the case of wheat, while India had notified the MPS of Rs 4,947.8 crore in 2013-14, or 3.53% of the value of production, the US calculations suggest the apparent support actually stood at Rs 96,497.3 crore, or 65.3% of output value.
Citing WTO rules, the US said: “… if India provides product-specific domestic support, including MPS, for a specific basic agricultural product in excess of 10% of the value of production for that crop during a given year, India will be in breach of its AMS (aggregate measurement of support) commitments under the AoA (Agreement on Agriculture).” The US factored in India’s support for the four most recent years that it had notified to the WTO — from 2010-11 through 2013-14. The claims were part of the US counter-notification on May 4 in the WTO Committee on Agriculture on India’s MPS for wheat and rice. In March, the US dragged India to the WTO complaining that New Delhi had been offering illegal export subsidies, worth around $7 billion a year, that “harm American workers by creating an uneven playing field on which they must compete”.
In an email response to FE, a US embassy spokesperson in New Delhi said: “WTO Members have raised almost 100 questions in the WTO Committee on Agriculture on India’s policies over several years, but have received little substantive information in response.” Interestingly, while the US claims India is offering massive subsidies to its grain farmers, in a joint paper submitted with the WTO last year, India and China said rich nations — including the US, the EU and Canada — have been giving huge, illegal and trade-distorting subsidies to their farmers.
Together, the developed world has cornered 90% of total entitlements, amounting to a $160 billion annually, they said in the paper. In fact, the massive farm subsidies offered by the developed world, including the US, has long been a sore point with developing nations at almost every ministerial conference of the WTO. In its latest submission, the US has said that India was the world’s second or third largest agricultural producer but its farm exports jumped 22% between 2011-12 and 2013-14 during which it moved up from being the 10th to the seventh-largest exporter. India was the world’s biggest rice exporter, with 20% of its supplies covering a third of the global market.