For an enduring solution

WTO rules on foodgrains must be updated

About 60 countries, including India and China, have put up a joint proposal for consideration at the upcoming 12th ministerial summit of the World Trade Organization (WTO) in Geneva from June 12 to resolve some of the contentious issues concerning food stockholding, agricultural subsidies, international trade, and humanitarian aid. The move has come at a time when the world is confronted with a serious food crisis and is looking for an enduring solution. What lends weight to this initiative is the composition of the group as it includes not only food-exporting but also food-importing countries of Asia, Africa, and the Pacific regions, including India, China, Egypt, Indonesia, South Africa, and Pakistan. They have suggested a revised and updated method of computing farm subsidies.

The present system of using the prices prevailing in 1986-88 as the benchmark for calculating these subsidies has become outmoded and irrelevant. So also are the existing provisions regarding permissible subsidies — fixed at present at a maximum of 10 per cent of the value of the produce — and the “Peace Clause” mooted for staving off disputes emanating from breaching this subsidy cap. The proposed amendments require a virtual recasting of the WTO’s Agreement on Agriculture (AoA), which was concluded way back in 1994 and has failed to deliver on its aims to remove trade barriers, promote transparent market access, and integrate global markets. India has, for long, been criticising the AoA, maintaining that it is tilted towards the developed countries. Now that New Delhi has received the support of no fewer than 59 other WTO member countries, including some with considerable global clout, such as China, the situation seems ripe to press for making this agreement compatible with contemporary market realities and provide a level playing field for all stakeholders.

This accord was negotiated and drafted chiefly by the US and the European Union, which dominated the talks on the General Agreement on Tariffs and Trade in the early 1990s. The negotiators from the developing countries, who were mainly officials from their trade ministries not too conversant with issues concerning agriculture and farmers, were not allowed to have much say in these talks. Unsurprisingly, therefore, it was tailor-made to protect the interests of the developed nations rather than addressing the food security-related concerns of food-deficit developing countries. Even the reference period for the calculation of subsidies — 1986-88 — suited the rich countries because it allowed them greater leeway to increase their support to the farmers while denying the similar space to developing countries.

The new plan proposed by these 60 countries makes a pitch for updating the reference price for subsidy calculation from 1986-88 to a more recent phase, such as the prices prevailing in the past five years, excluding the highest and the lowest entries for this period. It also calls for permitting, with requisite conditions, exports of foodgrains from public stocks to meet the urgent needs of food-stressed countries. Besides, it envisages greater flexibility for developing countries to formulate their policies concerning the production, acquisition, and stocking of foodgrains with an eye on domestic food security. The underlying idea of the move, clearly, is to modify and modernise the WTO norms to safeguard the genuine interests of the farmers and consumers of all countries to ensure universal food security.