Ignoring Public Stock Holdings (PSH) and MSP by WTO

Ignoring Public Stock Holdings (PSH) and MSP by WTO

Recently India has raised objections in WTO against neglect of issues like Public Stock Holding (PSH) and Minimum Support Price (MSP).

The 12th Ministerial Conference (MC12) of the World Trade Organization (WTO) will be held in June. Just ahead of the event, Canada, New Zealand and Paraguay have expressed concern over the G-33 and India’s request for a permanent solution to the issue of public stock holding programmes.

Public stock holding programs are used to buy and store food grains to distribute food grains among the needy people.

Public stock holding support infrastructure is provided under the separate box of the WTO.

However, domestic support, which distorts the trade, is subject to the de minimis limit. De minimis is the minimum amount of domestic support that is allowed even if the business is distorted. It is 10% for developing countries and 5% for developed countries.

Presently, public stake holding subsidy including minimum support price for crops is treated as a trade distorting subsidy.

A thorough implementation of a food security program may result in breaches of WTO limits. Hence, India is demanding amendment in the formula to calculate the food subsidy limit.

As an interim measure, WTO members at the Bali Ministerial Meeting (2013) agreed to implement the ‘Peace Clause’.

It protects the food procurement programs of a developing country from action by WTO members if subsidy limits are breached.

G33 (Allies producing specialized products in agriculture):

  • It is a grouping of 47 developing and underdeveloped countries including India, Brazil and South Africa.
  • It was formed during the Cancun Ministerial Conference of the WTO. It was formed to protect the interests of developing countries in agricultural trade agreements.

WTO’s Box for Public Stock Holding Support Infrastructure

Green Box-

  • These measures are exempt from deduction commitments. In fact, it can even be extended without any financial limit under the WTO.
  • This applies to both developed and developing member countries. But in the case of developing countries, special treatment is provided for government shareholding programs for food security purposes and subsidized food prices for the urban and rural poor.
  • (India’s Public Distribution System –PDS does not come under Green Box)

Amber Box –

  • All domestic support measures (with a few exceptions) that are considered to distort production and trade come in an amber box.
  • For example, Minimum Support Price (MSP); The sum total of the purchase price and the subsidy on inputs like fertilizers, water, credit, electricity etc.

Blue Box-

  • It actually has amber box subsidies. But, they limit production. Any such support which is normally in an amber box will be placed in a blue box if such support forces farmers to limit their production.
  • These measures are also exempt from deduction commitments.

S&DT (special and differential treatment)

This includes investment subsidies like tractors and pump sets, agricultural input services like fertilizers to farmers, etc. Such subsidies can only be given by developing and low-income countries.

Source – The Hindu

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