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Even as widespread consensus is emerging amongst members that the WTO ministerial in Bali will finally yield some result in the form of an agreement on trade facilitation, India has decided to give its green signal only when there is an accord on subsidies given to poor farmers.
While there is considerable progress taking place in trade facilitation agreement, the developing countries like India, China, Philippines and Indonesia have already put their foot down and called for a “balanced outcome.”
This is going to be extremely crucial as the ministerial meet that is taking place in Bali (Indonesia) during December 3-6 is seen by many as a turning point in global trade talks.
An agreement on trade facilitation basically refers to reduction in red tape and enhancing customs cooperation. For the first time in last 12 years, since the talks have started in 2001, there is going to be an agreement on the issue of trade facilitation.
According to WTO director general Pascal Lamy there is “considerable progress” happening in trade facilitation agreement and a deal on this might result in a $1 trillion boost to world economy.
However, the India has made it clear it will not give its consent in passing the agreement unless the developed countries, especially, the US give its consent on the food security proposal that was part of the December 2008 text on agriculture based on which the talks had been going on since then.
“We have made it very clear that this proposal (on food security) is very important for us and without some satisfaction on this proposal, we will not be in a position to give anything on trade facilitation, though, we are fully in agreement with some parts of trade facilitation and we want to do it but we also want to see a balance … If we do not link the two then trade facilitation agreement will go through and this crucial issue on food security will lose importance and relevance,” a senior official, involved in the negotiations, told Business Standard.
Hence, India, along with other developing countries, have demanded is that those subsidies that are given as part of the procurement which is done for public stockholding from poor and marginal farmers should not be regarded as a ‘prohibited subsidy’ or ‘amber box’ subsidy by the WTO.
In WTO terminology, agricultural subsidies have been categorized as green box subsidies (subsidies that are allowed without any cap and are least trade distorting), amber box subsidies (subsidies that are to be reduced with a stipulated period) and blue box subsidies (subsidies that are given as part of special schemes).
This proposal was originally mooted by the G33 group of emerging nations that was included in the December 2008 text.
“So this is not a new proposal. We have simply picked up the proposal, which was already there in December 2008 text, and brought it to the forefront for an early harvest. This was agreed as a single undertaking and include it with the trade facilitation agreement and the LDC (least developed countries) package,” the official said.
The December 2008 text states: “acquisition of stocks of foodstuffs by developing country members with the objective of supporting low-income or resource-poor producers shall not be required to be accounted for in the AMS (Aggregate Measurement of Support).”
While the US is completely against such a proposal, the European countries are still ready to discuss the issue and find out an amicable solution to the problem, officials said. This is because the US feels, any agreement on this issue will give unprecedented flexibilities to China as gives much more subsidies compared to India in terms of numbers and their procurement levels are much higher.
An agreement on this proposal is “extremely crucial” for India as 99% of its farmers fall under the ‘low-income or resource-poor’ category. Moreover, Indian government is also concerned of the fact that in public procurement it is soon going to overshoot the ‘De Minimis’ level, the threshold beyond which subsidies cannot be given under global trading rules.
The current threshold is the 10% of the total value of output in agriculture can be given as subsidy. The calculation is on two sides one input side and another output side. So, the net subsidy was still negative. However, subsequently, input subsidies have risen sharply and also domestic price of India's farm produce is much closer to international rate. Hence, the agriculture ministry is concerned that the threshold could be breached in near future.
The WTO considered any farmer holding less than 10 acre of land as small and marginal, so no farmer fell in the category of small and marginal, but off late this has been brought down to farmers holding less than 4 acre of land, which is why, India will have some portion of farmers who will be outside this ambit.
* India to demand consensus on agricultural subsidies for poor and subsistence farmers in lieu of its consent to trade facilitation agreement during Bali ministerial on December 3-6, 2013
* India has asked for launch of negotiations at the earliest for an early harvest on food security concerning subsidies before agreeing to a beneficial package for least developed countries (LDCs) or poor countries
* US not ready for talks as it believes such an agreement will provide too much flexibility to China
* Europe ready for talks but not committed anything yet
* India concerned that without relaxation in subsidy it will cross De Minimis level of subsidies soon that will violate global trading rules
* 99% of Indian farmers fall under the low-income, resource-poor category
* The WTO considered any farmer holding less than 10 acre of land as small and marginal, so no farmer fell in the category of small and marginal, but off late this has been brought down to farmers holding less than 4 acre of land, which is why, India will have some portion of farmers who will be outside this ambit
(With inputs from Sanjeeb Mukherjee)
