Resist meddling

India’s food security law has run into trouble at the World Trade Organisation (WTO) with some countries, including the US, terming it as a trade distorting measure and violative of the world trade body’s Agreement on Agriculture of 1988, to which the country is a party.

Under the agreement farmers in India could be paid only a procurement price below the price stipulated in the agreement, adjusted for inflation. The argument is that international grain supplies may be affected when Indian farmers produce more grains as they are offered higher procurement prices to meet the increasing demand in the country.

India has maintained that the procurement price does not exceed the stipulated price when inflation is taken into consideration but there is dispute over the extent of inflation to be allowed in the computation of price. The WTO can impose penalties if it decides that the procurement price involves unfair subsidy.

There are indications that a short term solution to the dispute is being worked upon, which will shield India from any penalty for three years, pending a wider discussion of the issue at the WTO ministerial conference in Bali in December. WTO director-general Roberto Azevedo, who held discussions with commerce ministry officials in Delhi on Monday, has hinted at this. The Indian position has the support of other developing countries in the G-33 grouping. Ensuring the food security of poor people is an important social objective in all developing countries. They should not allow developed countries to dictate the terms of implementation of the schemes meant for the poor. While the US and European countries object to the subsidy levels in the procurement of grains from farmers and distribution to people in poor countries, they themselves pay high subsidies running into billions to the rich farmers. Refusal to negotiate a reduction in these subsidies is one main reason for the deadlock in the talks on a multilateral world trade agreement.

India has offered to ensure that the procured food grains will not be exported and that public stocks will be managed transparently. It has also pointed out that the current rules of international trade do not recognise the need for food security in poor countries as a factor to be paid attention to.  India should resist all attempts to raise legal and technical objections to a scheme meant to benefit the majority of its people. As it has noted, changing or updating of WTO rules may be needed for that.

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