By Yash Budhwar
As World Trade Organization (WTO) member countries converged in Buenos Aires, Argentina, on December 10th for a Ministerial Conference meeting, India remains focused on ensuring that a permanent solution on public stock-holding (PSH) subsidies for food security is decided. The Ministerial Conference is the apex decision-making body of the WTO, whose meetings are convened every two years. In the 2013 edition, in Bali, India was promised that a permanent solution on PSH subsidies will be arrived at by the 2017 edition of the Conference. This is what India is currently negotiating for in Argentina, and what its representatives will continue doing so for the next three days.
Why subsidies are important for India
Stockholding of food products by the government (PSH) is important in India, given the large scale of the dependence of many on agriculture as a source of income. As many as two-thirds of the countrys 1.3 billion population are dependent on agriculture. Thus, subsidies that are given out by the governmentsuch as in the form of minimum support prices for the governments public distribution schemeare important in maintaining the stream of income for these people. However, such subsidies have been opposed by developed countries in the recent Conferences of the WTO. They are being opposed on the grounds that these trade subsidies have the capability to distort and manipulate international trade, leading to unfair trade practices.
Details on the compromise reached in 2013
The reason why India is seeking a permanent solution this time around is that a temporary fix to the problem was arrived at in 2013, in Bali. India managed to negotiate a peace clause at the Bali meeting, which specified that no action will be taken against it in case its PSH subsidies breach 10 percent of the production value of such food products. However, it was subject to a number of clauses.
One such clause specified that India had to submit a regular series of data and notifications providing clarifications as to the actual amount of subsidies paid for by the government. The second clause specified that only those food procurement programs enacted in 2013, such as the National Food Security Act of 2013, and not any formulated after 2013, would be covered under the peace clause. There was also confusion as to whether the peace clause would continue after 2017 if a permanent solution to the problem could not be arrived at after this years edition of the Ministerial Conference. To this end, Prime Minister Narendra Modi ensured that it would, after successfully negotiating with the developed countries that are against PSH subsidies.
How to reach a breakthrough in Argentina
Given Indias large-scale reliance on agriculture in maintaining the livelihoods of the majority of its population, it cannot afford to fall back on subsidies for PSH. However, given that one of the clauses of the peace compromise depends on the submission of data to interested parties unless India has something to hide, there should be no problem in the provision of such information. Even if it means that additional collection points and processes have to be formed, isnt that a worthwhile expense compared to the potential damage that can be inflicted upon millions of lives that are dependent on subsidies for PSH?
The other potential avenue for reaching a solution is the second demand that India has headed to Argentina with a compromise on e-commerce related negotiations that might hamper the development of the industry in India. Leading industry figures have stated that such negotiations will hamper the growth of indigenous e-commerce platforms because of the relative inexperience of the industry compared to its global peers.
India has to decide whether the supposed hardships of maintaining and providing the requested-for data and thus maintaining the peace clause is not comparable to a more permanent solution. If it decides to continue opting for a permanent solution, it will likely have to compromise on at least one of the other objectives it has set out to Argentina for. Time will tell which of the two happens.
Photo by Well-Bred Kannan (WBK Photography) on Visual Hunt / CC BY-NC-ND