I am surprised at the amount of neglect an important issue of national and international importance has suffered at the hands of the Indian media. Though the print media has more responsibly discussed the issue at some length, there is no buzz about the same in the electronic media. I don’t know how many of us are even aware of the upcoming WTO’s Bali Summit and its implications for the developing world, especially India.
Let us look into the background first. WTO or World Trade Organization is the outcome of the 8th round of multilateral trade negotiations, also known as Uruguay Round, which took place under the GATT (Generalized System on Tariffs and Trade). Till the formation of WTO in 1995, the international trade was governed by GATT. WTO had a much greater mandate as it dealt with areas like services, intellectual property rights, investment etc. which were not within the ambit of its predecessor which dealt mainly with the manufacturing sector. WTO advocates the following principles of trading system: trade without discrimination, free trade, predictability through transparency, promoting fair competition and; encouraging development and economic reform. The highest decision making body of WTO is the Ministerial Conference which meets once every two years. So far there have been eight such Ministerial Conferences and the ninth is scheduled to take place in Bali in Dec, 2013.
There are many agreements under WTO which include TRIPS (Trade Related Intellectual Property Rights), GATS (General Agreement on Trade in Services), TRIMs (Trade Related Investment Measures), Agreement on Technical Barriers to Trade etc. But it is the AoA (Agreement on Agriculture) which has come up as a major point of contention for the upcoming ministerial. This agreement provides for trade reforms in agriculture and is based on three principles:
The first principle is ‘reduction in domestic subsidies’ which includes three concepts: green box, amber box and blue box. Green box includes all the non-trade distorting subsidies and hence, are exempted from reduction commitments. Amber box includes trade distorting subsidies and hence are subjected to reduction commitments. If a member nation wants to avoid the reduction commitment under amber box, the value of total subsidies must be lesser than 5% of agricultural product for developed countries and 10% of the agricultural product for the developing countries. This level is known as de-minimus level of subsidies. The blue box contains subsidies given under production limiting programs; they too are considered non-trade distorting.
The second principle pertains to reduction in export subsidies and the third principle to, improving the market access.
During the Uruguay Round too, agriculture was one of the issues which created difficulties in the developed and developing countries seeing eye to eye. European countries, which had been supporting their farmers with subsidies under Common Agriculture Policy, did not want domestic agriculture subsidies to be guided by a multilateral trade regime. On the other hand, developing countries desired the market access to their agriculture produce in the developed countries. Anyway, once the AoA came into force, a clause ‘due restraint as the peace clause’ was placed under its Article 13. This peace clause prohibited any country from challenging those domestic and export subsidies programs of other countries that were permitted under the rules. Consequently, peace clause became a veil behind which developed countries promoted their domestic agriculture by manipulating subsidies and putting them under the green box (which was exempt from reduction commitments). This had an adverse impact on the developing countries where the agriculture produce from the developed countries was dumped. Not only this, the poor countries had to restrict their own state supported procurement and public distribution schemes to meet the trade rules.
India recently passed its Food Security Act which aims to provide food security to 67% of its population. Now, it is contended by the developed countries that this sort of ‘domestic subsidy’, under the Minimum Support Prices, would breach the 10% level envisaged under the ‘de-minimus’ level and hence, are pressurizing us to cut back the subsidy. The draft for the Bali ministerial is pushing for allowing the peace clause for India to continue till the 11th ministerial i.e. our food security program under this act may be continued only for another four years. This has been rightly rejected by India (which is also leading the G33 countries at the ministerial), but has not been able to get its position included in the Draft for Bali owing to the fierce opposition from the developing countries.
Let us see how and why we are justified in our demands. It is to be noted that the caps for deciding the de-minimus level are calibrated to the food price levels at 1986-88! India is contending the shifting of the base year to a more recent one so that the global food price inflation is taken into account. Alternatively, an appropriate deflator may be used to remove the impact of inflation on our administered food prices. Also, the ‘de-minimus’ level of subsidies are calculated on the basis of total production and not actual procurement, which is grossly unfair.
If we look at the statistics, studies suggest that while India seeks to provide 60kg of foodgrains per person per year under the Food Security Act, the US is already offering 385kgs per person per year under its several programmes. Also, while India’s food subsidy bill is expected to be around $20 billion, the amount spent by the US for its food aid programmes had reached $100billion in 2012 itself.
If India concedes to the peace clause, it would only give us the breathing space for another four years only and will not offer any permanent solution. It would put the risk of the lives of around 60crore Indian farmers at risk and will be detrimental to their interests. Plus, the peace clause holds valid for only a selected few crops. Not only this, it has an additional conditionality of more transparency on public stocks of food.
It is time when India and G33 demonstrated their will to stand the pressure of the developing countries and fight for the rights of the millions of poor farmers. Also, it is extremely surprising that there is no buzz about the issue among the various political parties, who otherwise hold parliament to ransom on many petty issues. Electronic media is also to be blamed for negligence by holding no discussions on such a critical issue, betraying the interests of millions of poor farmers. The proposed draft for Bali only serves the interest of the developed nations to the detriment of the poor nations. It is important that the issue be widely discussed and a strong public opinion be formed across the countries before the ministerial begins. Let us rise for our justified demands!
