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WTO: Cabinet to take strong stand on food security

The current Agreement restricts the 'market distorting subsidies' to just 10 per cent of the total production.

Written by Surabhi |
November 25, 2013 3:52:29 am

The Cabinet Committee on World Trade Organization on Monday will deliberate on the stand India should take in the upcoming Ninth WTO Ministerial Talks in Bali next month.

Ahead of the talks,India is of the view that a watering down of the “peace clause” could help it provide higher subsidy payouts to farmers.

“The duration of the peace clause should not be seen as the main issue. Lifting of the subsidy cap could be more useful to a country like ours,which provides minimum support price to more than two dozen crops,” said a senior government official.

A shorter duration in the peace clause could also help reach a final solution and take forward the stalled Doha round of global trade talks.

The peace clause offers a respite for four years from attracting penalties when the agricultural subsidies cross 10 per cent of total production. When the recently-passed food security bill,which entitles around 67 per cent of the population to 5 kg of subsidised foodgrains,is fully implemented,the subsidies are likely to breach the 10 per cent limit.

The current Agreement on Agriculture of the WTO restricts so-called “market distorting subsidies” to just 10 per cent of the total production.

However,G-33 countries including India and Indonesia are hoping for changes to the pact to remove restrictions on public stock holding and food subsidies.

This is especially crucial to India which has just enacted the Food Security Act,under which food subsidies would breach the 10 per cent limit. The peace clause would also help India implement the Food Security

Act without breaching the WTO subsidy levels. The clause,offered by WTO chief Roberto Azevedo as an interim solution,will provide developing countries a four year relief period from penalties on breaching the food subsidy cap.

However,developing countries have been calling for the peace clause to be maintained at eight year.

The issue is likely to be taken up for discussion on Monday when the Cabinet Committee on WTO meets.

Farmers groups in India are up in arms against the peace clause and have urged Prime Minister Manmohan Singh to stand up against developed nations including the US and EU and reject any proposal that will impact agricultural subsidies and affect over 600 million farmers of the country. The farmer groups have argued that the AoA was framed keeping in mind prices of 1986-88 when the prices were very low.

In fact,Sharma has also impressed upon the WTO director general that India’s position on food security is non-negotiable. The Ninth WTO Ministerial Talks is scheduled to take place in Bali,Indonesia between December 3-6.

Agri Pact

* The Agreement on Agriculture of the WTO restricts so-called “market distorting subsidies” to just 10% of the total production

* However,G-33 countries are hoping for changes to the pact to remove restrictions on public stock holding and food subsidies

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