WTO Ministerial Conference: India’s food security demands a strong stand on the ‘peace clause’

Need to safeguard farmers’ livelihoods as well as public stockholdings to meet food security demands.

The forthcoming ministerial conference of the World Trade Organisation at Abu Dhabi is being held in the shadow of a farmers’ agitation that revolves around several key issues that India seeks to resolve at this multilateral forum. These include the complexities of procurement prices and the need to safeguard farmers’ livelihoods as well as public stockholdings to meet food security needs. The consequent need for expanding limits on agricultural subsidies in emerging economies may also be examined during the trade body’s deliberations. Most of the themes that have underpinned the farmers’ protests will thus be part of the consultations.

The big difference is that on the international stage, the minimum support price mechanism is viewed through the prism of subsidy limits laid down by the trade body. In contrast, the farmers unions spearheading the protests have sought a legal framework to expand rather than contain agricultural subsidies, They are seeking to widen the scope of government procurement and also provide a legal guarantee for minimum support prices.

Our Subsidies, Their Subsidies

Acceptance of their  demands will push the subsidy for the farm sector way beyond the cap of ten percent of the value of production laid down at the multilateral trade body. Yet the agitation is, in a sense, timely as it tells the world that the pressure to provide farm subsidies is intensifying in emerging economies in order to raise incomes beyond subsistence levels for those ploughing the land.

The developed world, on the other hand, continues to provide massive subsidies to its own farmers. The problem is that WTO rules do not allow for computing such subsidies on a per farmer basis. With Indian farmers estimated at over 95 million, the per farmer subsidy may be extremely low but this is not the criterion accepted at this forum. The result is that the global North is allowed to pay large subsidies to their farmers while those of the South face ceilings on such payouts.

India will have to tackle several of these tricky issues at the 13th ministerial conference. As for ceilings on farm subsidies, this was dealt with originally at the Bali ministerial conference in 2013. India was then able to successfully argue that subsidy beyond the ceiling was essential on public stockholding of foodgrains as it was procured by the state at prices meant to support Indian farmers. It was also accepted that such public stockholding programmes ensure food security for 800 million people.

The concession translated into what was described as the “peace clause”. It stipulated that no country would be legally barred from food security programmes for its own people even if the subsidy breached the limits specified in the WTO Agreement on Agriculture. The so-called peace clause has not, however, been made a permanent provision at the trade body. Instead, it has been extended on a temporary basis at every subsequent ministerial conference.

Needed: A Permanent ‘Peace Clause’

The challenge for India is to make this into a permanent facility, given the need of emerging economies to provide farm subsidies to support agricultural growth and food security. Without such a permanent solution, India faces the prospect of disputes being raised at the trade body over breach of subsidy limits.

Such disputes look imminent as the Cairns group of countries which includes Australia, Canada and Brazil has been arguing that India’s public stockholding programme is heavily subsidised. The 18-member group of  agriculture exporting countries have insisted that the support being given to farmers is not only distorting global food prices but also hurting the food security of other countries. They even circulated a proposal last year seeking to cut the global subsidy limits by 50 percent over the next few years.

In contrast, farmers of India’s northern states which provide the bulk of foodgrains for public stockholding are actually seeking to expand the scope of subsidy. Apart from a legal guarantee for the MSP mechanism, they have also sought widening of the list of covered crops. Such enhanced subsidy levels will not, however, be protected by the peace clause and can be challenged by other WTO members like those in the Cairns group.

In this backdrop, it is clear that India will have to work in tandem with other developing economies of the global South to find a resolution to agricultural sector issues at the WTO. It will also have to play a more aggressive role. At the last conference, it accepted a watering down of its original proposal on a patents waiver to meet the needs of a pandemic. A waiver was given only for vaccines, leaving out critical therapeutics and diagnostics.

On the farm sector, it will have to take a much tougher stand if the “peace clause” is to be made permanent and thereby enable the country’s food security to be made non-negotiable at the multilateral trade body.

Sushma Ramachandran is a senior journalist based in Delhi. Views are personal, and do not represent the stand of this publication.