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India and US have started discussing ways to hammer out a permanent peace clause that will enable New Delhi to provide subsidies to farmer without the risk of litigation from World Trade Organization (WTO) member-countries.
Talks seemed to have gained considerable momentum after the bilateral meeting between Prime Minister Narendra Modi and US President Barack Obama in September. The latest discussion would help end the stalemate in signing into law a Trade Facilitation Agreement (TFA). India has refused to sign it as it wants a parallel agreement amongst all 160 members on public stockholding for food security.
In a possible change of stance, it is learnt, the US has finally agreed to negotiate India's demands on food security. India, on its part, has given the US authorities a road map. If both parties reach a consensus, New Delhi might adopt the protocol of amendment of the TFA, which seeks to relax global Customs rules by cutting red tape and encouraging seamless passage of merchandise exports across international borders.
India has categorically told the US that the peace clause be continued until a permanent solution is found to the issue of food subsidies, instead of restricting it for four years, as was decided during the Bali ministerial last year, key officials involved in the talks told Business Standard .
This is because the government had told the WTO that subsidies might increase if procurement costs or minimum support prices (MSP) go up. MSPs are usually raised every year. The government was concerned that a rise in the subsidies given to the poor and marginal farmers will breach WTO's prescribed limit. With the peace clause, India can offer subsidies to farmers without being dragged to the WTO dispute settlement body.
Under the Agreement on Agriculture of the WTO, subsidies should not breach 10 per cent of the value of production of those crops which are stockpiled.
India and US, along with the European Union and other developed countries, are also discussing the possibility of creating an institutional mechanism to immediately start discussing a permanent solution to this issue by December 31.
India hopes, officials said, that when the next General Council meets in December, it will issue a statement spelling out the contours of the peace clause that will continue until a new rule is put in place.
Recently, while addressing the plenary session of the Asia-Pacific Economic Cooperation Summit in Beijing, Obama had said that he was "confident" of reaching a solution on the TFA. "Just one year ago we celebrated the conclusion of a historic trade facilitation agreement in Bali. As was just mentioned, that agreement has been breaking down over certain issues, although I'm actually confident that there's an opportunity for us to resolve them fairly soon," Obama said.
It is also expected that the upcoming G-20 Summit, might see some positive movement indicating the stalemate will soon come to an end.
