India opposes group consultation on food subsidy program at WTO
Recently India has opposed the collective consultation on the food subsidy program in the World Trade Organization (WTO).
- A 10-member group consisting of developed and developing countries including the US, Australia, Canada, Brazil, Thailand etc. had proposed a ‘collective consultation model’ instead of a ‘bilateral one’.
- This group includes developed and developing countries as well as food importers and food-exporting countries. No such draft was provided for consultations under the Bali Ministerial Meeting (2013).
- As per WTO rules, domestic support that distorts trade has to be de-minimis (minimum level).
- Domestic support is called the overall measure of support or ‘AMS’. This is sometimes called Ember Box support.
- D-minimis is the minimum amount of domestic support that is allowed, even if it distorts the trade.
- Some types of public stockholding programs (PSHPs) are known to distort business. For example, purchase of food grains from farmers at the prices fixed by the government. This is known as support price or administered price.
- In India it is called Minimum Support Price (MSP). PSHP is used for procuring, storing and distributing food grains to needy people for the purpose of food security.
- To deal with such a support system, WTO members proposed a “peace clause” at the Bali ministerial meeting. According to this proposal, no country will be legally prohibited from conducting food security programs, even if the subsidy being given violates the D-minimise.
- A ‘peace clause’ is a kind of interim solution until a permanent solution is found.
- Green Box: Green Box Subsidy that does not distort business, or creates minimal distortion. There is no limit to this subsidy.
- Amber Box: This is the widest range of subsidies. It is limited to 5% of agricultural production (10% for developing countries).
- Blue Box: A wider range of blue box subsidies is allowed, but it should be designed to create less trade distortion. No subsidy limit.
Source – The Hindu