India willing to stall WTO deal to ensure food security for all

business

Updated: Jul 24, 2014 02:05 IST

India will not support the World Trade Organisation’s (WTO’s) “trade facilitation agreement” (TFA) if the deal doesn’t come bundled with a permanent solution that will allow unhindered roll-out of welfare schemes such as the food security programme.

As first reported by HT on July 21, India has firmed up its position for the forthcoming WTO talks that food security and state-funded welfare schemes were non-negotiable.

In a position finalised by the government ahead of the WTO’s General Council meeting in Geneva on Thursday, India has worked out a hard bargain strategy for drawing up a permanent solution on food subsidies.

“India will propose to take the stand at the WTO that the TFA should be implemented only as a part of a single undertaking including a permanent solution on food security,” a top government source told HT.

The government will seek a postponement of the of the TFA, which seeks to speed up procedures and make trade easier and cheaper across nations, to December 31, 2014.

At the Bali Ministerial in December last year, the WTO member countries had agreed to make trade easier, faster and cheaper by making systems transparent and reducing red tape by agreeing to adopt the TFA from July 31.

New Delhi is of the view that without a permanent solution on food subsidies, India’s public stockholding programmes such a buffer stock of foodgrains will be hampered by the present ceiling on subsidy to farmers.

Existing rules cap the value of food subsidies at 10% of the value of production. But the way the support is calculated at prices of more than two decades earlier means many countries would find it difficult to stay within the limit potentially attracting strong penalties from the trade body.

This will affect India’s food security programme and food grain procurement through the minimum support prices (MSP).

“The MSP policy acts as a means to keep farmers engaged in cultivation and if this comes into question, the livelihood of half of India’s population would be in jeopardy. More than 90% of India’s farmers are resource-poor, who own less than 10 hectares of unirrigated land,” the source said.

According to Indian trade negotiators, developed countries have pressed for early adoption of the TFA that will give them enhanced market access but have avoided discussions on other issues.

India will also make a strong pitch for deciding on a roadmap with clear timelines for different stages till finding a solution December31, 2014 and review the progress by the WTO’s General Council in October this year.

“Once the TFA is implemented, India would have lost the bargaining space for an outcome on food security,” the source said.

This stance to brazen it out, however, carries the risk of pushing India into corner if the WTO decides to adopt the TFA by a simple majority. Besides, pressure from developed countries could adversely affect bilateral trade ties.

"The TFA protocol amendment can be adopted by a simple majority voting. However, the option of voting has never been exercised in the WTO," an Indian official said.