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US intransigence on farm issues could jeopardise WTO talks

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13 December 2017

The eleventh round of ministerial conference (MC 11) of the World Trade Organisation (WTO) at Buenos Aires could collapse over US attempts to stonewall Doha Round commitments on agriculture and development and instead introduce new issues.

Attempts are now being made by some nations, including the United States, to begin discussions on market access for micro, small and medium enterprises (MSMEs) while India and other developing countries are insisting on amendments to the formula to calculate food subsidy cap.

By stonewalling discussions on the issue of food security, the US and its allies are also trying to cover up the most trade-distorting form of subsidies used mainly by the rich developed countries.

The US, EU and Canada have been consistently providing trade-distorting subsidies to their farmers at levels much higher than the ceiling applicable to developing countries. Developed countries have more than 90 per cent (or nearly $160 billion) of global entitlements of Aggregate Measurement of Support (AMS), a measure of support that developed countries have managed to incorporate in trade talks. Most of the developing countries, including India and China, do not have AMS entitlements.

India has expressed "deep disappointment" over the decision of a "major member country" to renege on its commitment for a permanent solution to the public food stockholding issue at the ongoing ministerial conference of the WTO.

Instead, the US says India and China do not deserve to be treated as developing countries and that the issue of public stock holding of foodgrains is a non-issue.    

By undermining food security issue, the US and other developed countries are trying to push new issues such as e-commerce and investment facilitation through the back-door, threatening a successful conclusion of the four-day conference.

Commerce and industry minister Suresh Prabhu, leader of the Indian delegation, has sought a meeting with the Chair of MC 11 Susana Malcorra to register India's protest at the new developments.

Without naming the US, an official statement said, "India is surprised and deeply disappointed that despite an overwhelming majority of members reiterating it, a major member country has reneged on a commitment made two years ago to deliver a solution of critical importance for addressing hunger in some of the poorest countries of the world."

"...A major country stated categorically that they cannot agree to any permanent solution on the public stockholding at MC11. This has posed a severe threat to a successful conclusion of the conference as there was a ministerial for mandate for a permanent solution by the MC11," it said.

Assistant US Trade Representative Sharon Bomer Lauritsen is reported to have told a small group meeting that permanent solution to the food stockholding issue was not acceptable to America.

For India with 800 million of its people engaged in agriculture and other developing and underdeveloped countries, however, a permanent solution to food security issue is crucial for livelihood of their citizens.

India has the backing of about 100 countries on the issues of agriculture and development and will continue to participate in the efforts to draft a credible ministerial declaration.

The effort would be to ensure that the final declaration reaffirms the principles of the multilateral trading system, commits to completion of the Doha Development Agenda, maintains centrality of development and availability of special and differential treatment to developing countries, the Indian release said,

India said it has been participating in MC11 in good faith in the spirit of constructive engagement and tried its best to engage with members in all formats.

"We have been proponents in several areas of work in the WTO, including public stockholding for food security purposes, agricultural Special Safeguard Mechanism, agricultural domestic support and e-commerce. We are committed to preserving and promoting the WTO and the multilateral trading system with a view to take the agreed agenda of the WTO forward," it added.

India's coalition partners, the release said, have remained steadfast in their support not only for a permanent solution on public stockholding but also on other issues of interest to developing countries.

The country had the support of over a 100 WTO member countries on all agriculture issues including proposal to set the direction of agriculture reforms by first eliminating the most trade-distorting form of subsidies used mainly by the rich developed countries.

The 53-member African Group as well as a large number of developing countries too have rallied around and firmly supported India in opposing rules on e-commerce and bringing in new issues such as investment facilitation and MSMEs into the WTO's agenda, it added.

Under the global trade norms, a WTO member-country's food subsidy bill should not breach the limit of 10 per cent of the value of production based on the reference price of 1986-88.

While India managed to negotiate a peace clause after the Bali meeting, which lays down that no action will be taken against it in case such subsidies breach limits, it is subject to a number of tough conditions which could render the clause ineffective.

Apprehending that full implementation of food security programme may result in breach of the WTO cap, India has been seeking amendments in the formula to calculate the food subsidy cap.

As an interim measure, the WTO members at the Bali ministerial meeting in December 2013 had agreed to put in place a mechanism popularly called the Peace Clause and committed to negotiate an agreement for permanent solution at MC11 in Buenos Aires.

Under the Peace Clause, WTO members agreed to refrain from challenging any breach in prescribe ceiling by a developing nation at the dispute settlement forum of the WTO.

This clause will be there till a permanent solution is found to the food stockpiling issue.

The ministerial conference which began on Sunday, comes to a close on Wednesday.





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