WTO TRADE DISTORTING AND PEACE CLAUSE

WTO TRADE DISTORTING AND PEACE CLAUSE

Subject: International Relations

Context: India has invoked the peace clause of the World Trade Organization for exceeding the ceiling on support it can offer farmers for rice for the marketing year 2018-2019, marking the first time any country has taken recourse to this safeguard.

Concept:

• India informed the WTO that the value of its rice production was $43.67 billion in 2018-19 and that it gave subsidies worth $5 billion. The limit is pegged at 10% of the value of food production in the case of India and other developing countries.

Peace Clause under Bali Agreement

• The peace clause protects a developing country’s food procurement programmes against action from WTO members in case subsidy ceilings are breached.
• As per the original Agreement on agriculture (AoA), the developed and developing countries have to keep their Amber box subsidies within De-minimus level i.e. 5% and 10% of their agriculture production in 1986-88 respectively.
• India opposed this base year and limits, because it’d make impossible to implement the food security programs for the poor and MSP for the farmers.
• Therefore, as a measure of temporary relief, Bali summit enacted a “peace clause” for the AoA

Salient features of Peace Clause

• No member, can drag any developing country to Dispute settlement mechanism of WTO.

For violation of De-minimus limits in AoA

Provided that the said developing country is paying subsidies for staple foodcrops for public stockholding program for food security purpose.

Is providing annual information of its food security Program to WTO.

• Permanent solution will be taken no later than 11th ministerial conference i.e. at December 2017.