In a recent WTO meeting, India urges prioritisation of issues, including a permanent solution for public stockholding and special safeguard mechanism
In a meeting of the Committee on Agriculture (CoA) of the World Trade Organization (WTO) held in Geneva on December 4, 2024, India insisted that negotiations on unresolved/previously mandated issues in agriculture, including a permanent solution to public stockholding, special safeguard mechanism (SSM) and elimination of trade-distorting cotton subsidies by rich countries etc, be ‘prioritised’ and ‘fast-tracked’ by treating them as standalone issues instead of clubbing them with other issues.
The US, on the other hand, criticised the prioritisation of certain issues over others, stating that this was the primary cause of the longstanding stalemate in agriculture. India also rejected a new proposal presented by Guyana to advance agricultural negotiations ahead of the WTO’s 14th Ministerial Conference (MC14 is tentatively scheduled to take place in Cameroon in 2026) by adopting a so-called ‘non-traditional approach based on convergence’. India reiterated that any facilitator-led process should be ‘consensus-based’ and respect WTO’s multilateral principles. It emphasised on Text-based negotiation (TBN). TBN refers to the process of working up the text of an agreement that all parties are willing to accept and sign. Negotiating parties may begin with a draft text prepared by the Chair of the particular committee dealing with the subject.
The draft is based on discussions amongst the member countries and is fine-tuned till all the nations are in agreement with it. This is in sharp contrast to a convergence-based approach that involves super-imposition of non-multilateral trade regimes on the multilateral trading system (MTS). The theorists dealing with international trade in particular, WTO-related issues describe it as a process of ‘gradually aligning different trade regimes, in particular preferential trade agreements (PTAs) and the MTS’. Others define convergence as requiring ‘greater coherence between trade rules and policies, norms and standards in other areas of international cooperation’. Shorn of jargon, this is a well-orchestrated attempt by the developed countries – the US, the European Union (EU), the UK, Australia, etc (they exercise disproportionately greater influence during actual confabulations at the WTO, set the agenda of meetings, float proposals more often through small countries such as Guyana and get away with what they want) to scuttle the standard practice of taking decisions by consensus where every member country has an equal voice.
Therefore, India has rejected this approach, rightly so. But, what happens to India’s demand for ‘prioritising’ and ‘fast-tracking’ negotiations? In a meeting of the CoA held on October 2, 2023, in Geneva, the EU agreed to consider India’s demand for a permanent solution to the public stock-holding (PSH) program for food security.
Accordingly, India had urged WTO members to start TBN on the issue as soon as possible and get this deliberated at the WTO MC-13 slated to be held in Abu Dhabi from February 26-29, 2024. But, that was not to be. The Ministerial Conference ended in a deadlock. On the issue of finding a permanent solution to the (PSH) for food security, India’s stance was vehemently opposed by the USA/EU. Earlier attempts by India also met with the same fate. At the Trade Policy Review (TPR) meeting held at WTO in January 2021, India insisted that the three issues should be taken up on a priority basis at the MC-12. But, in that Ministerial Conference held in Geneva on June 12-17, 2022, the issues were not even put on the table. The deadlock has existed for more than two decades despite India taking up these issues at WTO under what has come to be known as the Doha Development Agenda (DDA). Developed countries had junked DDA at MC-10 held in Nairobi (2015). On the most contentious issue of a permanent solution for PSH, a ray of hope emerged when in the WTO-General Council (GC) meeting in Geneva (July 31, 2014), India insisted on a time-bound action plan on the subject matter to be executed before the end of 2014 co-terminus with approval of Trade Facilitation Agreement (TFA) – an area of great interest to developed countries. This was a good strategic move but it was abandoned midstream. In December 2014, even as the developed countries got away with the TFA, the developing countries got an “extension of the peace clause till a permanent solution was found.” Put simply, India had literally surrendered its right to secure a permanent solution; that it was “Ok” with “the benefit of peace clause.”
What is the peace clause?
To understand this, let us look at the Agreement on Agriculture (AoA) of the WTO. Under it, a developing country cannot give aggregate measurement support (AMS) – an acronym for subsidies – over 10 per cent of the value of its farm production.
The AMS includes “product-specific” subsidies and “non-product specific” subsidies on agricultural inputs such as fertilisers, seed, irrigation and power. The “product-specific” subsidy is the excess of the Minimum Support Price (MSP) paid to farmers over the External Reference Price (ERP) multiplied by the quantum of agri-produce. Whereas the MSP is taken for the relevant year, say, 2023-24, the ERP is the average of the global price prevailing during 1986-88 fixed in rupee terms. If the subsidy given by a developing country exceeds 10 per cent, it will be treated as a violation of its WTO commitment. This has been a major worry as India could face action in a situation of AMS exceeding the 10 per cent threshold. In this backdrop, the MC-9 in Bali (2013) had agreed to a “peace clause” under which “if a developing country gives AMS in excess of 10 percent, no member will challenge this until 2017, when the WTO would look for a permanent solution to address their food security concerns.” It came with several riders such as submission of data on food procurement, stockholding, distribution and subsidies. These also include establishing that subsidies are not “trade distorting.” Besides, programs implemented after 2013 are not covered under the ambit of the ‘peace clause’. In December 2014, the WTO-GC modified the above decision to provide for “extension of the peace clause till a permanent solution was found”. Unfortunately, India concurred with this modification. This took away the sanctity of the 2017 deadline by which time members were to find a permanent solution as per the MC-9 mandate.
A decade since then, India is still looking for a solution! In regard to SSM – it allows members to temporarily raise tariffs beyond the “bound levels” (this is the maximum permissible duty that a member country can impose under a bound rate agreement) to counter surges in import or price drops. The 2015 MC-10 in Nairobi recognized that developing countries will have the right to take recourse to SSM as envisaged under the Hong Kong Ministerial Declaration. That was at MC – 6 (December 2005).
Since then, it has been almost two decades. Even now, these countries can’t take recourse to SSM. They haven’t also been able to prompt developed countries to eliminate their cotton subsidies. To conclude, despite the deft handling of negotiations at the WTO and representing the majority of the developing countries (India leads about 80 countries – the G33 including India, African, Caribbean and Pacific countries or ACP) so far, India hasn’t succeeded in securing the intended outcomes. Given the intransigence of developed countries and their clout at WTO, there is little hope from the MC – 14.
(The writer is a policy analyst; views are personal)
https://www.dailypioneer.com/2024/columnists/call-for-fast-tracking-wto-agricultural-negotiations.html
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