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Business News/ News / World/  Proposal on low-income farmers faces opposition at WTO
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Proposal on low-income farmers faces opposition at WTO

Initial positions adopted by major industrialized countries indicate that a solution is not likely to materialize

WTO members are required to come up with a permanent solution for public stockholding programmes by the end of this year. Photo: AFPPremium
WTO members are required to come up with a permanent solution for public stockholding programmes by the end of this year. Photo: AFP

Geneva: The US, the European Union (EU), Canada and Australia have opposed a proposal from India and other developing countries at the World Trade Organization (WTO) that seeks policy space to support low-income farmers through a permanent solution for public stockholding programmes for food security.

WTO members are required to come up with a permanent solution by the end of this year.

Initial positions adopted by major industrialized and a few developing countries such as Pakistan, Paraguay and Thailand indicate that such a solution is not likely to materialize, said several trade envoys familiar with a closed-door meeting held last Friday.

The chair for Doha agriculture negotiations, John Adank, convened the meeting to discuss new rules that would increase the policy space for the permanent solution for public stockholding programmes for food security.

India’s trade envoy Anjali Prasad made a strong case as to why the policy space is needed through a permanent solution for public stockholding programmes. She said public distribution system (PDS) programmes feed hundreds of millions of people in developing and the poorest countries.

India expressed concern over the repeated attempts by some countries to take the negotiations for the permanent solution backwards by raising extraneous issues. The market price support (MPS) that sustains public procurement programmes is an “incentive" to farmers to continue cultivation, and every member present in the room is providing MPS, India said.

After two-and-a-half years of intense negotiations on the need for a permanent solution due to the existing structural anomalies in the WTO’s agreement on agriculture, the US, the EU, Canada and Australia are adopting an evasive strategy for denying a permanent solution, said a former trade envoy familiar with the negotiations.

The US, for example, told the meeting on Friday that it lacks the understanding of the nature of the problem concerning public stockholding programmes for food security. Washington wants to know how the existing agreement on agriculture does not allow policy space for developing and poorest countries. It emphatically called for open markets and food security for all.

The EU, which supported the US at the meeting, said it will not agree to include public stockholding programmes in the green-box subsidies that are currently exempt from reduction commitments.

Canada maintained that the purchases for public stockholding are meant to address hunger of the producers and the distribution of PDS stocks will lead to export surges and import substitution.

Australia said what India and other Group of 33 (G-33) countries are asking for is more policy space for trade-distorting farm support.

Last year, the G-33 group of developing nations presented a detailed proposal on how to arrive at a permanent solution for public stockholding programmes for food security by making credible changes to the WTO’s agreement on agriculture.

The G-33 gave three options to address the problem. First, adding a new paragraph to include market price support for food security in the so-called green-box disciplines of the agreement on agriculture that are exempted from any subsidy reduction commitments. Second, modifying the existing rules to ensure that the acquisition of food stocks by developing countries to support low-income and resource-poor farmers is not required to be calculated under the current method of calculating aggregate measurement of support (AMS, or trade-distorting farm subsidies). And third, modifying or amending the rules to calculate subsidies based on the so-called external reference period of 1986-88 prices, which was decided during the previous Uruguay Round of negotiations.

The 2008 revised draft modalities prepared by the former chair for Doha agriculture negotiations, Crawford Falconer of New Zealand, had proposed the requisite changes to ensure that “there is no requirement for difference between the acquisition price and the external reference price to be accounted for in the AMS".

Indonesia, which is the coordinator for the G-33, told the US that its proposal goes “beyond the mandate to find a “permanent solution" for public stockholding programmes for food security purposes.

The US proposal underscored the need to review “the efficacy and trade effects of the existing public stockholding programmes for food security policies", “to review the existing WTO rules and policies adopted by members and how these policies are constrained by those rules", and finally to establish “best practices for capacity building to implement the agreed best practices".

Criticizing the US proposal, Indonesia said the G-33 “would like to make it clear that we tabled the proposal not because we have limited capacities to adopt best practices in this area but, rather, because we need some policy space to effectively support low-income or resource poor farmers, to fight hunger and rural poverty".

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Published: 21 Apr 2015, 12:38 AM IST
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