India faces uphill task on MSP Stockholding

Subject : International Relations

Context: Developed members say India can’t have permanent solution to MSP issue at WTO Ministerial meet.

Concept :

Facilitator for the talks on Special safeguard mechanism said that because of political and technical complexities , no outcome could be expected at MC12 .

Special Safeguard Mechanism (SSM)

WTO’s Special Safeguard Mechanism (SSM) is a protection measure allowed for developing countries to take contingency restrictions against agricultural imports that are causing injuries to domestic farmers.
The contingency measure is imposition of tariff if the import surge causes welfare loss to the domestic poor farmers. The design and use of the SSM is an area of conflict under the WTO.

What are safeguards?

In WTO’s terms, safeguards are contingency or emergency restrictions on imports taken temporarily to deal with special circumstances such as a surge in imports. Contingency restriction means imposition of an import tax if the imports are causing injuries to domestic agricultural sector.
The original GATT itself allows such restrictions to protect domestic economy.

Doha Development Agenda and the origin of the SSM:

At the Doha Ministerial Conference, the developing countries were given a concession to adopt a Special Safeguard Mechanism (SSM) besides the existing safeguards (like the Special Agricultural Safeguard or the SSG).
This SSM constituted an important part of the promises offered to the developing world at Doha (known as Doha Development Agenda) and the Doha MC became known as a development round.
As mentioned, the Special Safeguard Mechanism (SSM) allowed developing countries to raise import duties on agricultural products in response to import surges.

Difference between SSM and other safeguards under Agreement on Agriculture:

The SSG was available to all countries- both developing and developed whereas the SSM is allowable only to the developing countries.
It is to be mentioned that the SSG was available as it was inducted under the GATT agreement; whereas the SSM was the invention of the Doha MC.

Conflict among WTO members about the structure of the SSM:

But the design of exact rules of the SSM created conflict among the WTO members. Setting the conditions for putting restrictions on imports and the amount of tariff imposition became contentious issues and it caused the delay in the implementation of the entire Doha Development Agenda. Powerful negotiating countries at the WTO, the US and India had conflicting versions about the structure of the SSM.
Other countries joined the two sides later. The G33 supports India’s stand whereas the advanced countries and some agricultural exporting countries like Brazil supports the US stand.