India under fire at WTO for avoiding questions on MSP

India under fire at WTO for avoiding questions on MSP

Subject: International Relations

Section: International Organization

Concept :

• India faced pressure at the World Trade Organisation (WTO) for avoiding questions raised on India’s minimum support price (MSP) programmes for food grains, especially rice, as subsidies have crossed the prescribed limits.
• Members like the U.S., Australia, Canada, the EU, and Thailand have asked India to reply to questions asked on its public stockholding (PSH) programmes at the WTO agriculture committee meeting.
• India’s MSP policies are under scrutiny as India became the first country to invoke the Bali “peace clause” to justify the breach of the 10% ceiling (of the total value of rice production) for rice support in 2018-2019 and 2019-2020.
• The Bali “peace clause” permits developing countries to exceed the 10% ceiling without invoking legal action by members.
• However, it is subjected to stringent terms and conditions which include not distorting global trade and not affecting the food security of other members.
• India has, however, insisted that it has provided the best possible information and clarifications at the consultations held.

Peace Clause

• The peace clause protects India’s food procurement programmes against action from WTO members in case the subsidy ceilings – 10 per cent of the value of food production in the case of India and other developing countries – are breached.
• India’s Explanation
• India’s breach of commitment for rice arises from support provided in pursuance of public stockholding programmes for food securitypurposeswhich were in existence as on the date of the Bali Ministerial Decision on Public Stockholding for Food Security Purposes.
• India said that under its public stockholding programmes for food security purposes, rice, wheat, coarse cereals and pulses, among others, are acquired and released in order to meet the domestic food security needs of the country’s poor and vulnerable population, and “not to impede commercial trade or food security of others. For these reasons only the breach of the de minimis limits for rice is covered by the peace clause.
• Government does not undertake exports on a commercial basis from public stockholdings. Additionally, open market sales of food grains from public stockholding are made provided the buyer gives an undertaking of not exporting from such purchase.
• The peace clause can’t be challenged and because of this flexibility, distribution of food grains to the poor can be done for free which is crucial during the pandemic.
• India ensures food security through the minimum support price (MSP) programme, and Public Distribution System and National Food Security Act, 2013.

For further notes on WTO Agreement for agriculture, refer – https://optimizeias.com/wto-agreement-on-agriculture-and-the-peace-clause/