Market price support, input subsidy programmes for farmers in serious jeopardy if unofficial proposal from US gains currency.

Geneva: India’s market price support and input subsidy programmes for millions of resource-poor farmers are in serious jeopardy if an unofficial proposal from the US gains currency ahead of a crucial World Trade Organization (WTO) ministerial meeting in Nairobi in three months’ time.

Effectively, the Narendra Modi government will be forced to curtail the public distribution programme, which is based on market price support, and other input subsidies given to poor farmers if the US non-paper finds its way to Nairobi.

A non-paper is a discussion paper that does not necessarily represent the official position of the institution or country that drafted it.

Also, New Delhi’s demand for a permanent solution to public stockholding programmes for food security by the Nairobi ministerial meeting has almost been consigned to the dustbin in the face of roadblocks created by major industrialized countries.

On Tuesday, Washington circulated a two-page draft of the non-paper at a meeting of senior trade officials from industrialized and developing countries.

Officials from the US, the European Union (EU), China, India, Brazil, Australia and Japan, along with WTO director general Roberto Azevêdo, took part in the closed-door meeting to discuss a package of deliverables for the WTO’s 10th ministerial conference in Nairobi on 15 December.

The confidential paper, accessed by Mint, calls for avoiding using “market price support and input subsidies for agricultural products”. It says “each member shall, with respect to agricultural products, undertake commitment(s)” not to increase either “the applied administrative price for any agricultural product receiving market price support” or “its budgetary outlays for, or the scope of, product-specific input subsidies for agricultural products above the (existing) level”.

The draft gave the examples of four areas where it said members must undertake commitments to do away with market price support and input subsidies—fertilizer, seeds, electricity and diesel fuel.

Effectively, the US is asking countries to undertake commitments to reduce “market price support and input subsidies” regardless of their current categorization as industrialized, developing and least-developed countries.

The US does not provide input subsidies, but offers market price support for just one commodity—sugar. The EU, too, does not provide market price support and input subsidies. In short, the two trade majors do not have to undertake any commitments under this proposal, but developing countries such as India will be forced to undertake substantial commitments even though they are not required to under the existing WTO agriculture rules or the Doha negotiating parameters.

The US has proposed these commitments in the non-paper notwithstanding the exemption of input subsidies and market price support under Article 6.2 of the WTO’s agreement on agriculture for developing countries.

Further, the US paper goes against what was negotiated in the ongoing Doha agriculture talks, especially the July 2004 framework agreement, the 2005 Hong Kong ministerial declaration, and the unsettled 2008 revised draft modalities. Developing countries have been exempt from undertaking any commitments under these ministerial declarations as well as the 2008 revised draft modalities.

At the meeting on Tuesday, China and India dismissed the US proposal as unacceptable under any circumstances. The two countries told the US that its proposal was an attempt to avoid arriving at credible outcomes in the Doha agriculture package in which the US is required to cut its farm subsidies to below $14.5 billion, according to people familiar with the meeting.

“Clearly, the US non-paper is targeted at China and India, who are asking for credible outcomes in agriculture,” a trade official said.

Both China and India provide only de minimis (negligible) support. China provides 8.5% while India provides 10% under product-specific and non-product support. The two countries, along with other developing countries, are exempt from reducing their de minimis support under the Doha negotiating mandates, particularly the 2005 Hong Kong ministerial declaration.

“This is a most destructive proposal and it spoils the whole negotiating climate before the Nairobi meeting,” a trade official said, on condition of anonymity.

The US maintains its non-paper offers “a new idea”—rather than a one-size-fits-all approach, the proposal would allow explicitly for differentiated contributions, but all subsidizers would be expected to make a contribution, a US official maintained.

Sep 20, 2015
Source: livemint.com