Overview of the issues raised on Agriculture at WTO Meeting
- November 27, 2023
- Posted by: OptimizeIAS Team
- Category: DPN Topics
Overview of the issues raised on Agriculture at WTO Meeting
Subject : Economy
Section: External sector
- The three-day WTO Committee on Agriculture (CoA) meeting is set to begin.
- Key Focus Areas for India:
- Clarifications on the WTO-compatibility of the five-year extension for the PM Garib Kalyan Ann Yojna (PMGKAY) or the free foodgrains scheme.
- Detailed information on the reasons behind the ban on the export of non-basmati rice.
- Countries Submitting Questions:
- The US, EU, Canada, Australia, Switzerland, and New Zealand have submitted questions.
- The questions primarily relate to India’s Minimum Support Price (MSP) commitments and export restrictions.
- Canada’s Inquiries:
- Canada seeks information on whether procurement under the extended PMGKAY will be done at administered prices instead of the current market price.
- Inquiry about India’s consideration of the impact of this approach on its WTO domestic support commitments.
- ‘Peace Clause’ and Subsidy Limits:
- The ‘peace clause’ allows developing countries to breach the 10% subsidy limit under specific conditions.
- India has invoked the ‘peace clause’ for breaching the subsidy limit on rice.
- Export Ban on Non-Basmati Rice:
- Questions on the basis for imposing an export ban on non-basmati rice.
- Concerns raised about the adequate availability of non-basmati rice.
- Granting Export Quotas:
- Questions about India’s decision to grant export quotas for non-basmati rice to certain countries after the export ban.
- Expiry Dates for Farm-Related Measures:
- Many countries demand that India should provide expiry dates for its farm-related products.
- Expected Discussions:
- Discussions will likely focus on India’s agricultural policies and their compliance with WTO rules.
- Emphasis on subsidies and export restrictions in the agricultural sector.
Agreement on Agriculture (AoA) in WTO:
- Introduction:
- The AoA is a WTO treaty negotiated during the Uruguay Round of GATT in 1994 and ratified in Marrakesh, Morocco.
- Came into effect in 1995 with reduction commitments for both developing and developed countries.
- Scope and Exclusions:
- Covers agricultural products but excludes forestry, fishery, rubber, sisal, jute, coir, and abaca.
- Least Developed Countries (LDCs) were exempt from reduction commitments.
- Market Access:
- Tariffication:
- Abolishment of non-tariff barriers, converted to tariffs.
- Tariff Reduction:
- Developing countries obliged to reduce tariffs by 24% in 10 years.
- Minimum access opportunities established, starting at 3% of domestic consumption in 1986-88, rising to 5% by 1995.
- Tariffication:
- Export Subsidies:
- Reduction Mandate:
- Developed countries to reduce export subsidy volume by 21% and expenditure by 36% in 6 years.
- Developing countries to reduce volume by 14% and expenditure by 24% over ten years.
- Reduction Mandate:
- Domestic Support:
- Reduction Requirements:
- Reduction in domestic subsidies distorting free trade and fair prices.
- Developed countries to reduce Aggregate Measurement of Support (AMS) by 20% in 6 years; developing countries by 13% in 10 years.
- Trade Distorting (Amber Box):
- Reduction of total AMS, with policies below 5% for developed, and 10% for developing countries excluded.
- Non-Trade Distorting (Green Box):
- Excludes assistance from reduction commitments, includes environmental programs.
- Government-funded, unrelated to current production or prices, and covers diverse areas like research and rural infrastructure.
- Reduction Requirements:
Blue Box:
- “Amber Box with Conditions” to reduce distortion, includes direct payments with an upper limit.
- Special and Differential Box:
- Allows developing countries to implement measures subject to reduction, such as investment and input subsidies.
- Peace Clause:
- Legally protects countries from disputes regarding food security programs even if subsidy limits are breached.
- Protects India’s food procurement programs against WTO actions for breaching the subsidy ceilings.
WTO and Subsidies:
- WTO’s “Box” Classification:
- Subsidies are categorized into boxes with colors resembling traffic lights: green (permitted), amber (need reduction), and blue (exemption).
- Agriculture Agreement lacks a red box but prohibits domestic support exceeding reduction commitment levels in the amber box. The blue box is for subsidies tied to production-limiting programs.
- Types of Subsidies in AoA:
- Green Box:
- Non-distorting or minimally distorting subsidies.
- Not restricted by the trade agreement as they are considered non-trade-distorting.
- Must be government-funded, not involving price support, and not directed at specific products.
- Amber Box:
- Domestic support measures distorting production and trade.
- 30 WTO members commit to reducing trade-distorting supports in this box.
- Others must maintain supports within five to ten percent of the value of production.
- Blue Box:
- Includes support payments exempt from amber box reduction.
- Direct payments under production-limiting programs.
- Payments linked to fixed areas, yields, or livestock numbers, with limitations on production.
- Green Box:
Peace Clause, Public Stockholding (PSH) for Food Security Purposes, and Special Safeguard Mechanism (SSM):
- Peace Clause:
The Peace Clause is an agreement reached at the World Trade Organization’s (WTO) Bali Ministerial meeting in December 2013.
It provides developing countries with certain flexibilities, allowing them to exceed subsidy limits on food crops, specifically addressing concerns related to Public Stockholding (PSH) for food security.
A provision in WTO agreements that protects a member country’s domestic support measures from legal challenges even if they exceed agreed-upon limits.
Purpose: Allows developing countries to exceed subsidy limits temporarily without facing disputes, particularly concerning food security programs.
Conditions: Includes conditions related to notifications, data submission, and protecting the food security of other countries.
- Public Stockholding (PSH) for Food Security Purposes:
Refers to government holding and maintaining stocks of essential food commodities to ensure food security for the population.
Addressed under the WTO Agreement on Agriculture (AoA).
Challenges: Developing countries faced demands for more data and proof to establish that subsidized stocks were not being dumped in the global market.
Peace Clause: Invoked under the peace clause to exceed the 10% subsidy limit on rice.
- Special Safeguard Mechanism (SSM):
A mechanism that allows developing countries to impose additional tariffs on agricultural products in the face of import surges or price declines, providing a safeguard against sudden import increases.
Part of the AoA to protect developing countries’ agricultural sectors.
Typically triggered by specified import quantity or price thresholds.
Helps developing countries protect domestic farmers from import surges that could harm local production and food security.
Developing countries often advocate for strengthening the SSM to enhance their ability to respond to import disruptions.
G33:
The G33 is a coalition of developing countries within the World Trade Organization (WTO) that focuses on issues related to agriculture.
It includes countries from Asia, Africa, the Caribbean, and Latin America.
The primary objective of the G33 is to address the concerns of developing countries regarding agriculture, particularly issues related to food security and rural livelihoods.
Focus Areas:
- Special Products (SP): The G33 advocates for the designation of certain agricultural products as “Special Products,” allowing developing countries to maintain higher levels of support for these products without facing challenges under WTO rules.
- Special Safeguard Mechanism (SSM): Members of the G33 often support the enhancement of the Special Safeguard Mechanism, which allows developing countries to impose additional tariffs on agricultural products to safeguard against import surges or price declines.
- Public Stockholding (PSH): G33 members emphasize the importance of public stockholding for food security purposes and seek flexibility in implementing such programs without facing disputes.
Pradhan Mantri Garib Kalyan Anna Yojana (PM-GKAY):
- Objective:
- Scheme is a part of Atmanirbhar Bharat, PM-GKAY aims to provide free food grains to migrants and the poor.
- Overview:
- World’s largest food security scheme designed to ensure sufficient food during the COVID-19 crisis.
- Announced as part of the initial relief package in response to the pandemic.
- Beneficiaries:
- Targets beneficiaries under the public distribution system (TPDS), including Antyodaya Anna Yojana (AAY) and Priority Household (PHH) ration cardholders.
- Eligible beneficiaries receive 5kg of food grains and 1 kg of Gram per month.
- Eligibility Criteria:
- AAY Category:
- Identified by States/UTs based on criteria prescribed by the Central Government.
- Includes households headed by widows, terminally ill persons, disabled persons, or individuals aged 60 years or more with no assured means of subsistence or societal support.
- Also covers widows, terminally ill persons, disabled persons, individuals aged 60 years or more, single women or men with no family or societal support, and all primitive tribal households.
- PHH Category:
- Identified by State Governments/Union Territory Administrations based on their criteria.
- Encompasses landless agriculture laborers, marginal farmers, rural artisans / craftsmen, slum dwellers, and those earning livelihoods in the informal sector.
- Includes eligible Below Poverty Line families of HIV positive persons.
- AAY Category: