India’s ‘wheat waiver’ WTO Demand is Risk-Fraught
What is the current issue?
- India has been demanding to find a permanent solution to its Public Stockholding (PSH) issue with the WTO
- The General Agreement on Tariffs and Trade (GATT) traces its origins to the 1944 Bretton Woods Conference.
- The Uruguay Round, conducted from 1987 to 1994, culminated in the Marrakesh Agreement, which established the World Trade Organization (WTO).
- The World Trade Organization (WTO) is the only global international organization which deals with the rules of trade between nations.
- The WTO has 164 members (including European Union) and 23 observer governments.
- WTO aims to reduce barriers to trade and to create economic development through international trade.
India and WTO
Areas of contention
- India’s PSH policy is based on procuring food from farmers at Minimum Support Price (MSP), which is generally higher than the market price.
- However, under WTO law, such price support-based procurement is counted as a trade-distorting subsidy, and if given beyond the permissible limit, breaches WTO law.
- India has been given a reprieve under ‘peace clause’ which was introduced in the 2013 Bali Conference of WTO which allows for food security programs to violate the subsidy limit.
- However, the issue, while given a temporary solution, has not been put to rest as of now.
What does WTO regulations say about food procurement?
- WTO does not prohibit food stockpiling, provided its being done through non-trade distorting methods such as income support through direct benefit transfers.
- India wants to be a able to increase food stocks through price support measures, however, there has been no mention of this even in the recent Geneva Ministerial Conference.
What is India’s current demand?
- India insists that it should also be allowed to export food, most notably wheat, from the pool of the food grain procured under the MSP.
- India has raised this demand due to the current food crisis happening due to Russia-Ukraine conflict.
- This is not expected to be successful since WTO law prohibits countries from exporting food grain procured at subsidised prices.
- Paragraph 4 of the 2013 WTO decision on PSH for food security purposes, clearly states that countries procuring food for food-security purposes shall ensure that such procured food does not “distort trade or adversely affect the food security of other Members”.
- The same spirit is reflected in paragraph 10 of the Geneva ministerial food security declaration, which states that countries may release surplus food stocks in the international market in accordance with WTO law.
What should be done?
- Developed countries have been historically against India’s PSH programs saying this stock will be diverted to flood the global market with cheaper agri-products.
- India’s recent demands to do the same will be used by these countries to negatively impact our future efforts to find a reasonable solution to the issue.
- Hence, we must shift the focus from trying to achieve a waiver to sell the food grains, to ensuring a final feasible solution to our food security concerns.
- The laudable objective of helping countries facing food crises can be accomplished by strengthening India’s commitment to the United Nations World Food Programme.
- Conversely, if the domestic production increases, India can remove the ban on export of wheat by the private sector.
Source The Hindu
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