WHEAT WAIVER
Source: Hindu
One of India’s demands in WTO is to find a permanent solution to the issue of public stockholding (PSH) of food to protect India’s food security (PSH) policy.
India’s PSH policy is based on procuring food from farmers at an administered price (minimum support price or MSP) which is generally higher than the market price.
TWIN OBJECTIVES OF PSH POLICY
1) offering remunerative prices to farmers
2) Providing subsidized food to the underprivileged.
ISSUES
- Under WTO law, such price support procurement from farmers is counted as a trade-distorting subsidy, and if given beyond the permissible limit, breaches WTO law.
- Currently, India has temporary relief due to a” peace clause “which bars countries from bringing legal challenges against price support-based procurement for food security purposes. However, a permanent solution to this issue is still not in the offing.
- WTO ministerial meeting in June in Geneva did precious little to address this issue. Paragraph 10 of the declaration on food security adopted at the Geneva ministerial states- we recognize that adequate food stocks can contribute to the realization of member’s domestic food security objectives and encourages members with available surplus stocks to release them on international markets consistently with WTO rules.
- However for India, the real issue is not about maintaining adequate food stocks, which WTO rules don’t prohibit, provided food is stocked by employing non-trade-distorting instruments such as providing income support to farmers (cash transfers independent of crop production)
- India’s concern is that it should have the policy space to hold public food stocks using the MSP, which is a price support instrument. However, there is no mention of price support in the Geneva declaration.
NEW DIMENSION
India’s demand for a permanent solution to the PSH policy has acquired a new dimension. India insists that it should be allowed to export food, most notably wheat, from the pool of food grain procured under MSP.
This demand was recently articulated by Finance Minister Nirmala Sitharaman at the G20 meeting in Indonesia.
WTO LAWS
- It prescribes countries from exporting food grain procured at subsidized prices. Allowing a country to export food grain procured at subsidized prices would give that country an unfair advantage in the global agriculture trade.
- The country concerned will sell food grain in the international market at a low price, which in turn, might depress the global prices and hurt the agriculture trade of other countries.
- Accordingly, paragraph 4 of the 2013 WTO decision on PSH for food security purposes, clearly states that the countries procuring food for food security purposes shall ensure that such procured food does not “distort trade or adversely affect the food security of other members”
- The same spirit is reflected in paragraph 10 of the Geneva ministerial food security declaration, which states that countries may release surplus food stocks in the international market by WTO law.
- WTO may agree to a temporary waiver to allow the export of wheat from public stockholdings given the ongoing food crisis in some countries.
- As per article IX .3 of the WTO agreement, waivers can be adopted in exceptional circumstances.
- The WTO filibustered for two years acknowledging a once in a century pandemic such as COVID-19 as an” exceptional circumstance to adopt a waiver for permitting wheat exports from public stocks is profoundly remote.
FOCUS
- India should revisit its stand on asking for a waiver for wheat export from its public stockholding, which in any case, is not a part of India’s PSH policy.
- Besides as reported the government‘s wheat procurement has been 57.5% less than the original target for this season. So if the public procurement is so low what is the point in asking for a waiver to export wheat from the public stock
- Spending scarce negotiating capital on this issue might dilute India’s core agenda of pushing for a permanent solution for its PSH programme to attain the goal of food security and providing remunerative prices to farmers.
- The laudable objective of helping countries facing food crises can be accomplished by strengthening India’s commitment to the UN World Food Programme. Or if the domestic situation ameliorates, India can lift the ban imposed on private traders to export wheat.
