The devil may well lie in the details related to the use of the ‘peace clause’ in the WTO food security agreement, which have not been revealed either by India or the US, trade experts say.
The peace clause is the legal provision insulating members against action by other members in case of a breach of farm subsidy levels. New Delhi had agreed to a peace clause at the Bali meet till a permanent solution was found. It was later revealed that the peace clause, which was riddled with conditions such as non-trade distortive food programmes, was valid only till 2017.
Getting the US to agree to an indefinite peace clause seems like an improvement over what was agreed to at the Bali Ministerial, but it may not be enough, said Afsar Jafri from Focus on the Global South, a trade policy think-tank.
“It is important that the conditions for using the peace clause also get dropped as it is not possible for any country to follow these,” Jafri said.
India had demanded last year, in return for its consent to a trade facilitation agreement, that food procurement subsidies be exempted from the category of distorting subsidies. Other suggestions included changing the formula for calculating subsidies by updating the base year for calculation or indexing it to inflation.
“Many countries have been saying that India exports foodgrain from the procurement carried out by Food Corporation of India and this leads to trade distortion. You cannot stop any country from making such allegations,” Jafri said.
There could be a simple way of resolving this problem, according to Anwarul Hoda, former Deputy Director General of the WTO and a professor at research body ICRIER. “If you provide for neutralising inflation by increasing the Minimum Support Price every year, then the question of distortion will not arise,” Hoda said.
Hoda had earlier written a paper with agriculture expert Ashok Gulati explaining how proper interpretation of Article 18.4 of the WTO’s Agreement on Agriculture (AoA), which talks about making adjustments for inflation, could take care of India’s problems.
Damocles’ swordBiswajit Dhar, Professor, Jawaharlal Nehru University (JNU), said that if conditions are not removed, these will hang over India’s head like a ‘Damocles’ sword’.
“You will always be worried if you can implement your food security programmes,” he said.