WTO is very worried about impact of India's food bill on global markets

New Delhi: Ahead of WTO ministerial meet at Bali, the organisation’s new chief Roberto Azevedo said India’s food security law will raise subsidy levels and the

issue needs to be addressed in a positive manner.

Some members of the WTO, especially developed nations that are big commodity exporters, have raised concerns that its large stocks of wheat and rice could lead India to dump those on global markets.

Also, according to them, the food law that guarantees grains to nearly 70% of the country’s more than 1.2 billion people at nearly throwaway prices would artificially lower local prices and damp demand for their products in one of world’s largest markets.

India is also keen to win legitimacy for its ambitious food security law that promises highly subsidised foodgrain to the poor from the World Trade Organisation (WTO) and is open to the issue being discussed at the Bali meeting in December.

“One important issue where India is very much involved is food security proposal. Now what is behind that is because prices have been rising in the last few years, we see some countries like India for example getting very close to their commitments in the WTO.

“They would soon be breaching their what we call AMS (Aggregate Measurement of Support) commitments in the WTO. So, they are asking for some kind of actions in Geneva that could allow those programme to continue to work unaffected,” the WTO Director General said.

Terming it as a very complex issue, he said: “I doubt immensely that we are going to have finalised solution on all aspects of this issue in four weeks. It is just impossible.”

India is implementing the Food Security Act which entitles 82 crore people to 5 kgs of foodgrain per person in a month at the rate of Rs 1-3 per kg. The country needs 62 million tonnes of foodgrain in a year to implement the law. “The initial proposal (on food security) which was tabled by G33 was immediately rejected by many countries for different reasons…but we have made lot of progress since that point of time.

“From upfront rejection, we now are building environment for very constructive engagement that will try to address this issue in a positive manner,” Azevedo said in a joint press conference along with Commerce and Industry Minister Anand Sharma said.

“The negotiations are complex but there is an appreciation of legitimacy of food security and the associated concerns in India and other developing countries. Now we have to work towards an acceptable formulations,” Sharma said, adding that talks will find an acceptable solution.

The WTO chief said that trade ministers should engage and try to find a long-term solution. India is demanding amendments to the Agreement on Agriculture (AoA) under the WTO so that it can give more food subsidies to poor without attracting penalties.

The AoA allows the so-called ‘market distorting subsidies’ up to a limit of 10 per cent of total production.

As food prices and the number of poor to be supported in developing countries have risen in the two decades since the AoA was framed, these subsidies have gone up substantially. India is apprehensive that once the food security legislation is fully implemented, its food subsidies will breach the 10 percent mark.

When asked whether can India dilute its stand on the food security issue, Sharma said as all the WTO member-countries have different level of development and are facing different challenges, there is a need to find a middle ground.

“There is no uniformity. When you have so many aspirations and different levels of development, you cannot have an issue specific and a country specific solution. You have to find a middle ground which is acceptable to all. You do not go for negotiations with a tight list,” Sharma said.

“We are going to work intensely between now and Ministerial Conference in Bali to find a solution which will probably include both the elements of Peace Clause and something that ensures that a conversation (will) happen meaningfully after Bali,” Azevedo said The “peace clause” in WTO parlance gives legal security

to member-countries and protects them from being challenged under other WTO agreements.

Countries like the US and Canada have raised concerns over India’s food security legislation at the World Trade Organisation (WTO). They have also asked India to explain the effect the legislation will have on global stocks and commodity prices.

India has sought more time to come up with its stock requirement as the legislation is yet to be fully implemented.

While the G-33, a group of developing nations including India, is demanding that the tenure (of the peace clause) should be 10 years, developed countries such as the US are ready to accept only a 2-3 year period.

The WTO chief is in India as part of an effort to bridge differences on several of the vexed issues of the Doha Round of trade talks before the ninth Ministerial Conference in Bali from December 3.

When asked about the future of WTO if Bali meet fails, Azevedo said: “Bali is absolutely critical in establishing the conditions for moving in areas other then the deliverables that we are looking for in December. Bali is not end of the road. It is the first step towards an agenda that we have to define for the WTO”.

On this, Sharma expressed optimism for successful outcome from the Bali meet.

“We understand the need of such an outcome. I remain optimistic considering the progress that we have made in the recent months and weeks. There has been much movement and we are hopeful that we will cover the desired ground. They are very complex talks”.

PTI