WTO | Permanent solution to central pool stocks critical for India

Will the WTO Ministerial Summit at Abu Dhabi provide a permanent solution to food stocks in developing countries?

The 13th Ministerial Conference (MC) of the World Trade Organization (WTO) is scheduled to take place in Abu Dhabi from February 26 to 29. The functioning of the WTO is the major agenda item of such meetings which are held after every two years.

The future of agricultural trade is an important issue before the MC, and it is unlikely that a consensus will be reached. In any case, the world has not seen the successful implementation of agreements reached at multi-lateral forums like the United Nation’s Conference of Parties (COP, on Climate Change), G20, etc. If there cannot be abiding acceptance and action on the COP’s resolutions on emissions which are considered responsible for Climate Change, can we expect much progress from the MC in the negotiations on agricultural trade?

There are three major issues before the Abu Dhabi MC.

Three issues before the conference

First, is finding a ‘permanent solution’ to foodgrains procured by developing countries for meeting their needs of food security. India procures large quantities of wheat and rice at minimum support price, and it maintains buffer stock and strategic reserve for meeting the requirement of its public distribution system (PDS) under which wheat and rice are distributed free (since January 2023) to 813.5 million people.

In the last three years, due to the high procurement of rice (57-60 million tonnes), India has been exceeding the level of support provided for which it is eligible under the Agreement on Agriculture (AOA). In its latest notification to the WTO on March 31, India reported that it has again exceeded the eligible level of support for rice under AOA in the marketing year 2021-2022.

The second issue is the ‘Special Safeguard Mechanism’ under which developing countries want more flexibility to raise import tariffs if there is a sudden drop in global prices, or if there is a huge surge in the import of an agricultural produce. In the past, several  countries have experienced low prices due to global factors. This causes a surge in the import of agricultural products. As a result, the livelihood of millions of poor farmers in developing countries is adversely impacted due to this.

The third issue is a decision on the proposal moved by Nigeria on behalf of Africa. It suggests that the Least Developed Countries (LDCs) and Net Food-Importing Developing Countries (NFIDCS) should be allowed more subsidies than what is permitted under the WTO’s agreement on agriculture.

Settle open procurement issue for good

For India, a critical issue is to find a permanent solution to its central pool stocks of wheat and rice. So far, the Indian policy of open procurement of wheat and rice has not been challenged due to the Bali ministerial decision of December 7, 2013, in which it was agreed that a dispute in the WTO would not be raised by any country for stocks maintained for food security. However, India is required to comply with provisions relating to notifications, transparency, anti-circumvention, and safeguards.

An important part of the peace clause is that India ensures that such stocks do not distort global trade or adversely affect the food security of other countries. In simple language, it mandates that the central pool stock of foodgrains is not used for exports. India has not violated this mandate after Bali 2013. India has announced that the free distribution of foodgrains under the PDS, now renamed as Pradhan Mantri Garib Kalyan Anna Yojana, will continue till December 2028. Therefore, India is pushing for permanent settlement of food items procured for food security requirements.

Suggestions by global experts to break the WTO deadlock

In May 2021, an independent group of experts published a paper, New Pathways for Progress in Multilateral Trade Negotiations in Agriculture, in which several suggestions were made to take forward the negotiations. From India, Ashok Gulati and Anwarul Hoda (both Professors at ICRIER) contributed to this paper in which several suggestions have been made to break the deadlock in agricultural trade negotiations at the WTO.

They recommended acceptance of India’s proposal to calculate the support (subsidy) to the agriculture sector by considering the most recent international reference prices in place of the fixed reference prices of 1986-1988. If this is accepted, India will not be in violation of support being provided to wheat and rice. It is not known if the government has considered the recommendations contained in this paper.

India has posted a new envoy to the WTO. It is hoped that he will come to grips with the complexities of negotiations as the commitments have long-term effects on India’s agriculture sector.

(Siraj Hussain is former Union Agriculture Secretary.)

Disclaimer: The views expressed above are the author's own. They do not necessarily reflect the views of DH.