Hitting back at WTO members that have questioned India’s Minimum Support Price (MSP) programme for food, including the US and the EU, New Delhi has teamed up with Beijing to formulate a step-by-step proposal for rich members to eliminate their farm subsidies where the World Trade Organization (WTO) has allowed them higher amounts beyond de minimis (ceiling) levels.

In a joint proposal to the WTO submitted recently, the two countries have said that the reduction process should begin as early as 2019 to remove the asymmetry in the WTO’s agreement on agriculture and remove distortions in world trade.

“Any meaningful attempt at reforms in agriculture subsidies must address the asymmetry between the developed members on the one hand and most of the developing members on the other hand in their respective entitlements to AMS (Aggregate Measurement of Support) beyond de minimis and the flexibility to provide high product-specific support,” the proposal said.

Negotiations on further discipline on domestic support for agriculture should start only after reduction of trade-distorting subsidies by developed nations, it added.

US allegations

The US has recently taken on India, with support from the EU and Australia, on reporting of MSP for wheat and rice. Washington has alleged that India is under-reporting its subsidies, which New Delhi has refuted.

The new proposal by China and India is a follow-up of the first proposal submitted last year, where they pointed out that rich nations have been consistently giving trade-distorting subsidies (aggregate measurement of support) to their farmers at levels much higher than the ceiling applied on developing countries.

The developed world cornered 90 per cent of total entitlements, amounting to a whopping $160 billion annually, they said.

The first paper revealed that WTO rules provided flexibilities to a handful of countries, allowing them to increase harmful subsidies beyond de minimis levels, which resulted in subsidies for many items given by the developed world going over 50-100 per cent of the production value, while developing countries were forced to contain it within the 10 per cent ceiling or face penalties. As per the new proposal, a ceiling and reduction of AMS beyond de minimis as product-specific support would be the most important and incremental first step in the reform process for establishing a fair and market-oriented agricultural trading system.

The proposal further lays down steps based on which developed countries with product-specific-subsidies beyond the ceiling level should cut it down.

To ensure accountability, the proposal stated that each WTO member with AMS entitlements beyond de minimis shall annually notify the Committee on Agriculture about the product-specific AMS beyond de minimis and the value of production of the concerned agricultural product in sufficient detail, so as to monitor compliance with its obligations on product-specific AMS.

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