Unsung heroes of WTO food security battles

On April 2, US President Donald Trump, in his ‘Liberation Day’ speech, declared that a nation cannot survive if it does not produce its own food. For a country such as India — home to 1.41 billion people and millions of resource-poor farmers — this rings as gospel truth. 

That same day, India invoked the WTO’s Peace Clause to safeguard its minimum support price (MSP)-backed public stockholding programmes (PSH) for food security purposes from international challenges. 

Why was invoking the Peace Clause necessary? How did India secure this critical flexibility at the WTO? And what are the lessons for policymakers and negotiators of developing countries?

Need for peace clause 

India’s PSH programs provide price support to farmers and ensure food security by distributing subsidised grains through the public distribution system (PDS), covering more than 810 million people. Many developing countries, including China, Indonesia, Tanzania, Egypt, Jordan, Kenya and Zambia, rely on similar price-support-backed food security measures. With the world off track to achieve the Sustainable Development Goal ‘Zero Hunger’ by 2030, strengthening these systems is not just necessary —  it is urgent.

The Peace Clause shields developing countries’ PSH programs from WTO challenges, even if their price support exceeds subsidy limits. India has relied on this Clause to procure rice at MSP without legal challenge despite surpassing subsidy caps in recent years. 

Two critical questions lie at the heart of the debate: How much support is India allowed to give its rice farmers — and how is that support calculated under the WTO? 

Under WTO rules, India can subsidise rice up to 10 per cent of its production value. However, since 2018-19, this limit has been exceeded, reaching 11.98 per cent in 2023-24 — highlighting the tension between global trade rules and domestic food security needs. 

In stark contrast, developed countries like the USA, EU, Japan and Canada can provide subsidies exceeding 100 per cent, thanks to entitlements built for them under the WTO rules. 

This glaring disparity exposes the deep inequities of the global trading system — one that favors the rich while limiting the policy space of developing nations trying to ensure food security.

What makes the system even more unjust is the flawed method used to calculate support to rice producers. Under WTO rules, the subsidy is calculated by multiplying the difference between the current Minimum Support Price (MSP) and an outdated Fixed External Reference Price (FERP) with the quantity procured by the Food Corporation of India.

Here lies the problem: the FERP is based on international prices from 1986–88 — nearly 40 years ago. Comparing today’s MSP with a decades-old reference price inflates the subsidy figures to absurd levels, completely detached from economic reality. It is morally indefensible to claim that any support above Rs 3.5 per kg — based on a price from the 1980s — is a subsidy to farmers.

In what utopian world can rice be produced or purchased at Rs 3.5 per kg today? 

Those defending this outdated system must reflect. When inflation-adjusted salaries are delayed or denied, even officials and professionals protest. Yet, the same logic is denied to farmers in developing countries. They are expected to survive on prices fixed when the Berlin Wall still stood.

It is time to end this hypocrisy. Fair trade rules must account for present-day realities, especially when food security and farmers’ livelihoods are at stake.

Hard bargains and broken promises at WTO

Recognising the deep flaws in WTO rules, developing countries — led by India — have been demanding reforms since 2000 to protect their food security programs. 

Their concerns finally gained traction at the 2013 WTO Ministerial Conference in Bali, Indonesia, where an interim compromise was struck, thanks to negotiators of India and other developing countries. 

WTO members agreed not to challenge PSH programs for food security, even if a developing country breached the subsidy limit. However, this was only a temporary solution, with a commitment to find a permanent fix by 2017. In return, developing countries agreed to sign the Trade Facilitation Agreement (TFA) — a key demand of developed countries aimed at easing global trade logistics.

A stand for farmers

What followed the 2013 WTO Ministerial Conference is a lesson every trade negotiator and policymaker must remember.

In 2014, developed countries backtracked on their commitment, stating that the interim peace clause would only remain valid until 2017. 

If a permanent solution was not agreed upon by then, this temporary protection would expire — leaving Public Stockholding (PSH) programs across developing and least-developed countries vulnerable to legal challenges.

It was a direct threat to the MSP policies that underpin food security for millions across the Global South. For the newly elected Modi government, this became a defining diplomatic challenge: to defend India’s sovereign right to fight against hunger while also standing up for the interests of other developing countries.

In a bold and unprecedented move, India refused to ratify the Trade Facilitation Agreement (TFA), sending shockwaves through the global trade community. Media outlets around the world criticised the decision harshly, calling Indian negotiators a ‘blocker’ and even a ‘laughing stock’.

But behind the headlines was a principled stand. Indian negotiators made it clear: food security and farmers’ livelihoods were not bargaining chips to be sacrificed for the commercial interests of a few wealthy countries.

India’s tough stance eventually paid off. In November 2014, the WTO General Council agreed to a perpetual peace clause, ensuring that PSH programs would remain shielded from challenges even beyond 2017. This safeguard was further reinforced at the Nairobi Ministerial Conference in 2015.

India’s stand was not just about national interest — it was a powerful voice for equity, fairness, and the right of every nation to feed its people.

Lessons for negotiations

This food security battle offers many negotiating lessons. First, protecting the core national interest, such as food security and livelihoods, should not be compromised by developing countries under international pressure or media criticism. Despite enduring heavy criticism, Indian negotiators remained focused and secured a favorable outcome. Second, resistance or ‘no,’ if used strategically, can favorably change the balance of negotiations, as was the case with TFA. 

Third, strengthening alliances with other developing countries is extremely important in multilateral negotiations. The negotiating battle for the perpetual Peace Clause shows that India is standing up for many, not just the self, as a true voice of the global south. Fourth, Indian negotiators skillfully leveraged conditional commitments, linking the food security issue with the TFA as a bargaining chip to achieve a better deal. Finally, strong political leadership and unwavering backing are essential for negotiators to stay firm and advance national interests. 

The saga of Bali Peace Clause is the best example of leadership at the multilateral organisations, strategically overcoming international pressure, and turning it to negotiating victory to protect national interest.

Way ahead 

The negotiating battle for a permanent solution for food security is still ongoing. Since Bali, Indian negotiators have held their ground and built a strong alliance with over 75 developing and least developed countries, demanding that any permanent solution must be broader in scope and less restrictive than the current Peace Clause.

Specifically, developing countries are calling for an update of the outdated reference price using inflation-adjusted or recent trade data, as well as for expanding the coverage to more crops and food security programs, among others.

Given the significant proportion of the population facing severe hunger in the global south, especially Africa, a permanent solution to the PSH issue would be a litmus test for successful 14th WTO Ministerial Conference in 2026 at Cameroon.

Trump rightly stressed in his ‘Liberation Day’ speech the role of domestic food production in national security. In this context, resolving the PSH issue is critical not only for ensuring food security in vulnerable nations but also for preserving the WTO’s credibility and commitment to fighting global hunger. 

As negotiations continue, we must not forget the courage, endurance, and relentless commitment of the unsung heroes who, since the WTO’s inception, have stood firm to protect farmers’ rights and champion the fight against hunger.

Authors work at the Centre for WTO Studies, IIFT. Views expressed are personal and do not necessarily reflect those of Down To Earth.