The outcome of the Eleventh Ministerial Conference of the World Trade Organisation (MC11) beginning in Buenos Aires is difficult to predict as consensus continues to elude members on all key issues ranging from agriculture subsidies to e-commerce in the ongoing preparatory discussions in Geneva.
It is important for India not to lose focus, and concentrate on the key issue of finding a permanent solution on its public food stockholding programme.
- Subsidies under AoA:
- Under WTO’s agreement on agriculture (AoA), domestic-subsidies are classified into three groups: Green, Blue and Amber.
- Amber box subsidies create trade distortion because they encourage excessive production e.g. fertilizers, seeds, electricity and irrigation subsidies. Therefore, WTO wants to limit the amber box subsidies.
- Under the present rules, trade distorting subsidies given by developing countries are subject to a 10 per cent cap and members can be penalised if it is breached.
India, as part of the G-33 group of developing countries, has demanded that public procurement subsidies in the form of minimum support price programmes should not be treated as trade distorting and be allowed without limits.
- Input subsidies under Article 6:
Another proposal by the EU and Brazil links the permanent solution to an agreement on paring of domestic agriculture subsidies and also imposes stringent transparency conditions. Allowing such a linkage could be dangerous for India as it could then find itself under pressure to cut down on its input subsidies (such as fertiliser, seed and irrigation) that Article 6 of the Agreement on Agriculture allows for poor farmers.
In the ongoing negotiations, India’s weakness lies in the onerous conditions attached to the ‘peace clause’ (which protects the country against penalties in case food procurement subsidies breach the 10 per cent mark) it bagged as an interim solution at the Bali MC in December 2015.
These include limiting the clause to traditional staple food crops and existing programmes, setting a series of notification and transparency requirements and the obligation to hold consultations upon request, and also ensuring that the stocks procured do not distort trade or adversely affect the food security of other members.
While the US has stated that there was no question of going back on the obligations agreed upon in Bali, there are others such as Brazil, the EU and Russia, who are pushing for making the obligations more onerous by introducing conditions such as prohibition to export from the procured stocks.
Its greatest power comes from the fact that it managed to make the peace clause a perpetual one, following hard-nosed negotiations in 2014. This means that in case it is not offered a permanent solution to its liking, it is under no obligation to settle for one less favourable than the existing peace clause.
- Indian negotiators have to ensure that the existing peace clause is the starting point of any deal that members try to strike at Buenos Aires, and not budge even a centimetre in other areas where it needs to take on additional commitments.
- The country’s negotiating team in Geneva has already set the ball rolling in the right direction by making appropriate submissions and interventions in the preparatory meetings. Its draft ministerial declaration on e-commerce proposing status quo in the current structure of discussions is a brilliant way of declaring that India would, under no circumstances, support negotiations on multilateral rules on e-commerce.
- India has also joined forces with a number of other developing countries such as Malaysia and the Philippines to state that it is not ready to agree to a commitment against subsidies for illegal, unregulated, unaccounted (IUU) fishing and overfished stocks in Buenos Aires. It has to make its approval for any pact on fisheries subsidies, however harmless, contingent upon some gains in the area of permanent solution.
- Instead of being on the defensive on all issues, the country also needs to be aggressive and force developed countries to take on commitments to bring about a fairer world trade order.
- It is encouraging to see that New Delhi has already donned the aggressive robe in some areas. For instance, together with China, it has stressed that any reduction of domestic subsidies should start with developed countries cutting down on their high entitlements for Aggregate Measurement of Support (AMS). It has also supported the ACP proposal that the so-called green box and blue box of permissible subsidies, mostly provided by developed countries, should be reduced.
- In the fight for allowing special safeguard measures (SSM) to protect farmers against a surge in imports in developing countries (like in many developed countries), India has sided with Philippines’ proposal seeking to establish a price-based SSM at MC11.
- Although in most areas of negotiations the stand taken by India has been supported by many other developing countries so far, it should not come under pressure if it finds itself alone fighting for a particular cause. The stigma attached to being isolated or called a party-pooper is in fact nothing but a tool for powerful countries to make detractors fall in line.
- India should not allow the Doha Development Round, which developed members including the EU and the US tried to abandon at the last MC meet in Nairobi in December 2015, to be formally buried in Buenos Aires. It has to keep fighting to maintain the integrity of the negotiations launched in 2001 although the round has met with little success so far. We must remember that if all countries give up on the Doha Round, the mandate for development could be lost forever.