India backs permanent solution for public stockholding of food grains even as developing nations attack it
The WTO’s 13th ministerial conference is taking place in Abu Dhabi. Photo: WTO website Agriculture and fisheries took centre stage on the second day of the World Trade Organization’s (WTO) 13th ministerial conference in Abu Dhabi, as member countries held closed talks without any major breakthrough.
Sources close to the negotiations told Down To Earth that some of the countries, in their opening statements on February 27, targeted India and its public stockholding (PSH) of food and subsidies to farmers and compared it with the increase in its rice exports.
There was a view among some countries that if India has increased its rice exports in recent times, then how can it claim to need subsidies and stockholding, sources said.
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India’s export of rice accounts for nearly 40 per cent of total rice exports globally. But most of the share of this export is basmati rice, whereas what India subsidies, procures, and distributes under its food security programme is non-basmati rice.
The 13th Ministerial Conference of the WTO commenced on February 26 in Abu Dhabi, UAE. Food security at the WTO remains one of the significant unaddressed demands of the developing country members.
India and 80 other countries have been negotiating a permanent solution for PSH of food instead of temporary measures. PSH and other measures like subsidies and minimum support prices (MSP) are viewed as trade-distorting domestic measures by the developed world.
India argued that the focus should not be narrowed down to the trade interests of exporting countries only; the real concern is the food security and livelihood of people. The country emphasised that without a permanent solution to PSH, the most critical and long-pending mandated issue at the WTO, developing countries’ fight against hunger cannot be won, the Union ministry of commerce and industry said in a statement.
The negotiations become even more significant for India because they come at a time when the country is seeing farmer protests in Punjab, Haryana and Uttar Pradesh, demanding a legal guarantee for MSP. On February 26, 2024, farmer groups, under the banner of Samyukt Kisan Morcha, had called for ‘Quit WTO Day’, demanding the removal of the agriculture sector from the WTO agreement.
India, together with the developing G33 countries, the African Group, and the African, Caribbean and Pacific Group of States has emphasised standalone outcomes on the PSH programme. These countries represent more than 61 per cent of the world’s population.
The PSH policy makes it possible for the government to procure crops like rice and wheat from farmers at MSP, store and distribute these food grains to the poor and is thus essential for India’s food security strategy.
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A permanent solution to PSH is thus crucial for India and other developing countries, including Egypt, Indonesia, Jordan, Kenya, Morocco, Pakistan, Tunisia, Turkey, Zambia and Zimbabwe, among others, as it would legitimise higher subsidies for food stockholding programmes. Meanwhile, the developed countries are of the view that such programmes distort the global trade prices of food grains.
“India also recalled the vast differences in the actual per-farmer domestic support provided by different countries, as notified to WTO. Some developed countries provide subsidies that are 200 times higher than those provided by developing countries. It was the membership’s duty to ensure a level playing field in international agriculture trade for millions of low-income or resource-poor farmers,” the ministry said.
Currently, under global trade norms, a WTO member country’s subsidy bill should not breach the limit of 10 per cent (for developing countries) and five per cent (for developed countries) of the value of production based on the reference price of 1986-88. These allowances are called de minimis limits.
But this minimum support limit is also tilted in favour of developed countries, experts point out.
“Some 32 countries enjoy an extra Aggregate Measurement of Support (AMS) entitlement, which confers immense advantages to them. Of the total entitlement, more than 88 per cent goes to developed countries,” said Ranja Sengupta, senior researcher and coordinator of the trade programme, Third World Network, an international research body.
In addition, the shifting of subsidies by developed countries from a so-called Amber Box of trade-distorting subsidies to the Green Box of non-trade-distorting subsidies has also resulted in direct payments that have allegedly led to further advantages for their agribusiness, Sengupta added.
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Apart from increasing this de minimis limit, India has asked for amendments in the formula to calculate the price support subsidies given to farmers for government procurement. Currently, it is calculated as the reference price for 1986-88. This, the developing countries, said, is a flawed calculation.
They have time and again said they are facing barriers to their policy space to adequately support agricultural production and farmers’ livelihoods due to such rules.
The proposal text stated that the reference price should be either of the following:
“It should be based on recent prices; there should be consideration of inflation,” said one of the negotiators from India’s side, present in Abu Dhabi.
The developing world argued that these limits and the methodology used restrict the flexibility of the developing country members to administer price support backed PSH programmes.
A few days before the conference commenced, on February 16, the chair of the committee on agriculture placed a draft text in the public domain. This draft had placed New Delhi’s demands in square brackets, indicating a lack of consensus.
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India has made it clear that it will not budge on its demand for a permanent solution to the issue of PSH for food security at the ongoing conference.
“We want a permanent solution in this ministerial meeting. We don’t want to take this to the next ministerial meeting,” the negotiator said.
India has also maintained that any permanent solution has to be ‘Bali peace clause plus’.
At the Bali Ministerial Conference held in 2013, India was able to successfully argue that exceeding the subsidy ceiling was crucial for PSH of food grains. The state procured these grains at prices designed to support Indian farmers while simultaneously ensuring food security for over 800 million Indians.
Thus, it was agreed upon on an interim basis, that PSH programmes in developing countries would not be challenged legally, even if a country’s agreed limits were breached.
This concession translated into what was described as the “peace clause”. There was an agreement to reach a permanent solution by 2017, which was later reaffirmed by the Nairobi Ministerial Decision.
“However, given consistent opposition by developed countries, particularly the United States, several deadlines have come and gone,” said Sengupta.
Instead, this clause has been extended on a temporary basis at every subsequent ministerial conference.
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Meanwhile, discussions also started on the subject of fisheries, another negotiating priority for India and developing countries. The agenda for the WTO members is to discuss how to curb harmful fisheries subsidies that contribute to overcapacity and overfishing.
On February 27, 2024 discussions mainly moved on topics of distant water fishing discipline and the definition of small-scale fishers.
The Agreement on Fisheries Subsidies (AFS) was signed in 2022 at the 12th Ministerial Conference (MC12) of the WTO but covered prohibiting subsidies for only illegal, unreported and unregulated fishing and overfished stocks, two of the three pillars under which negotiations have evolved. The third pillar concerns subsidies that contribute to overfishing and overcapacity.
However, for the Agreement to be operational, two-thirds of WTO members have to deposit “instruments of acceptance” at the WTO. Till now, 70 members have deposited these, and 40 more formal acceptances are needed for it to come into effect. India is one among those that have yet to ratify the agreement.
Meanwhile, the draft text on curbing fisheries subsidies that contribute to overfishing and overcapacity proposed that member countries would have to demonstrate sustainability considerations for the fish stock on which subsidies were offered.
It said the least-developed country (LDC) members and developing country members with a global share of marine catch not greater than 0.8 per cent (de minimis) would be excluded from the core prohibition on subsidies.
Countries not falling into either of the other groups would have to demonstrate fulfilling the sustainability-based conditions outlined in the draft text in their regular notifications of fisheries subsidies.
India’s global share of marine catch is greater than 0.8 per cent (between 4-5 per cent) and thus becomes excluded from the prohibitions, but India is set to push against any such curbs on its subsidies to poor fishermen at the WTO.
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Olencio Simoes, general-secretary, National Fishworkers’ Forum (NFF), told reporters earlier this month:
India is the only country where small-scale fishers fish in large numbers and we hardly have deep sea fishing. Over 70 per cent of the fishermen are below the poverty line and for us, fishing is a livelihood issue. Fisherfolk are not responsible for decline in fish. It is because of other factors like industrial pollution, global warming and coastal degradation which has affected the fishers.
The draft text allows exemption for small-scale fisherfolk but the distance allowed for such fishing was between 12 nautical miles and 200 nautical miles. Small fisherfolk in India and even in other countries go beyond this limit.
India has sought a blanket exemption from subsidy cuts for all its fishers for a ‘transition period’ of 25 years to address their development needs and ensure their livelihoods. It argues that developed countries have depleted marine resources through industrialised overfishing and deep-water fishing. Meanwhile, the developed nations want to limit this period to no more than 7 years.
On February 27, India urged the WTO members to introduce a moratorium on subsidies by Distant Water Fishing Nations for fishing-related activities beyond their exclusive economic zone.
India reiterated its position on the principle of common but differentiated responsibility and respective capabilities, in reaching a comprehensive agreement, since the negotiations are linked to the concept of sustainability. It explained that the current approaches for addressing overcapacity and overfishing are deeply flawed, said the commerce and industry ministry statement.
“India said that the members should not lose sight of the harmful effects of subsidies for large scale fishing on sustainable fishing and management of marine resources,” it said.
Historically, while subsidies to the fisheries sector has led to overexploitation, they are also vital for developing countries and small economies to develop and diversify their fisheries sector as well as to protect the food and livelihood security of their fisherfolk, the ministry said.
The negotiations on both agriculture and fisheries are set to continue on February 28.
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