GS Paper II & III

News Excerpt: 

Recently, the wealthy nations claim Indian subsidies—in the form of Minimum Support Prices (MSP) for farmers and free food for the poor—breach WTO subsidy thresholds.

About the news:

• According to government officials, India will not negotiate on any farm issue at the World Trade Organization (WTO) until it finds a permanent solution to the issue of public stocks of foodgrains.
• Besides public stockholding for food grains, WTO members, particularly developed countries, want India to provide information on export restrictions in advance, which is not possible.
• According to government officials, the public stockpiling of food grain is the longest pending issue. 
• The promise was made by the members in the Bali ministerial and then later endorsed by subsequent conferences. 
• Without that, we will not take part in any discussion on any other issue on agriculture, unless the mandated issue is settled.
• India wants the matter settled as it prepares for the WTO’s 13th ministerial meeting in Abu Dhabi from 26-29 February. 

What is a Core issue?

• Developed countries have been red-flagging India’s food security programmes such as buying rice and wheat from farmers at a MSP for distribution through the Public Distribution System (PDS). 
• They have been alleging that procurement of grains at subsidized rates and storage distorts global agriculture trade.
• Under global trade norms, a WTO member country’s food subsidy bill should not breach the limit of 10% of the value of production based on the External Reference Price (ERP) of 1986-88.

Peace Clause:

• WTO members at the Bali ministerial meeting in 2013 agreed to put in place a mechanism popularly called a ‘Peace Clause’ and committed to negotiating a permanent solution.
• Under the Peace Clause, WTO members agreed to refrain from challenging any breach in the prescribed ceiling by a developing nation at the dispute settlement forum of the WTO. 
• This clause is in force until a permanent solution is found.
• India has also suggested changing the formula to calculate food, the subsidy cap and the inclusion of programmes implemented after 2013 under the ambit of a ‘Peace Clause’.

India's argument at WTO:

• The public stock issue goes to the heart of India’s Food Distribution System.
• India has to protect the interest of poor and vulnerable farmers along with ensuring the food security needs of a large section of the population.
• India has also conveyed that support measures given to its poor farmers like input subsidies on electricity, irrigation, fertilizer and even direct transfers are non-negotiable.
• The government provides 5 kg of foodgrains every month free of charge to around 800 million poor under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY).

Mains PYQ

Q. “The broader aims and objectives of WTO are to manage and promote international trade in the era of globalization. But the Doha round of negotiations seem doomed due to differences between the developed and the developing countries.” Discuss in the Indian perspective. (2016)