G-33 backing strengthens India’s stand on food subsidy at WTO

India’s demand that food procurement subsidies at the World Trade Organization be considered permissible is now being backed by the entire G-33 group of developing countries that has expressed the same view in a fresh proposal.

With the exception of Pakistan, all in the 46-member G-33, such as Indonesia, Venezuela, China, Peru, Nigeria and Sri Lanka, are in agreement that food aid and procurement programmes should be considered as ‘Green Box’ incentives that are not subjected to caps. The proposal was submitted on July 18.

The G-33 proposal is in sharp contrast to the US proposal circulated a few days before, which suggests that food procurement and subsidy programmes of developing countries be vetted to see that they don’t distort trade before any concessions are finalised.

The Committee on Agriculture, which had an informal meeting on July 14, will meet again on July 23 to discuss the two proposals put forward by the G-33 and the US.

Under the existing WTO rules, India’s farm subsidies, including those given for procuring foods grains from farmers at support prices, cannot be more than 10 per cent of the value of agricultural production. If the cap is breached, other members can challenge it which could lead to imposition of trade sanctions.

With a clear division emerging in how some developed and developing countries (represented by the G-33) would want a ‘permanent solution’ on food procurement subsidies to shape up, it will now be more difficult for rich countries to push for finalisation of the protocol for Trade Facilitation — a pact to improve border infrastructure to facilitate movement of goods.

“The fresh G-33 proposal is a reiteration of the position taken by the group in its November 2012 submission. This shows that developing countries are not willing to compromise on the crucial issue which affects the interests of its farmers and the poor,” a Government official told BusinessLine .

Pakistan, however, has expressed concerns that released stocks from India will enter the country at low prices if there are no caps on food procurement subsidies.

In the Bali Ministerial meeting of the WTO last December, members agreed to a trade facilitation pact, in return for which developing countries were offered an ‘interim solution’ which laid down that no action will be taken against countries for breaching farm subsidy caps till a permanent solution was found by 2017.

The interim solution was, however, riddled with various conditions including a rider that it wouldn’t be applicable if trade distortions happen.

India has now said that it will support the protocol for Trade Facilitation as a single undertaking that would include a decision on the long-pending package for LDCs as well as a settlement on the issue of food procurement subsidies.