New Delhi: India and China, in a joint proposal to the World Trade Organization (WTO), have called for elimination of trade-distorting agricultural subsidies given by developed countries, the commerce ministry said on Thursday.
The proposal, submitted on 18 July, counters the efforts of some WTO member countries that are targeting the subsidies given by the developing economies to their poor farmers while letting the developed rich nations retain their huge farm subsidies.
“India and China jointly submitted a proposal to the WTO calling for the elimination—by developed countries—of the most trade-distorting form of farm subsidies," the ministry said in a statement.
In WTO parlance, these subsidies are called as ‘Aggregate Measurement of Support (AMS)’ or ‘Amber Box’ support.
The ministry said it is an important proposal by India and China in view of the ongoing negotiations for the ministerial conference of the WTO to be held in Buenos Aires in December.
The ministerial conference is the highest decision-making body of the WTO, which meets after a gap of two years.
“The joint paper reveals that developed countries, including the US, the EU and Canada, have been consistently providing trade-distorting subsidies to their farmers at levels much higher than the ceiling applicable to developing countries," it said.
The subsidies by the developed countries amount to about $160 billion. On the other hand, countries like India provide a subsistence amount of about $260 per farmer annually. Most of the developing countries, including India and China, do not have AMS entitlements.
The proposal has illustrated the adverse effects of concentration of these subsidies on a few products.
Elimination of this support, “India and China believe, should be the starting point of reforms rather than seeking reduction of subsidies by developing countries", it added.
The proposal also said that subsidies for many items provided by the developed world are over 50%, and in some cases more than 100% of the value of production of the product concerned, while developing countries are “forced" to contain it within 10% of the value of production.
In other words, the proposal said, developed members of the WTO have access to huge amount of AMS beyond their de minimis—the minimal amount of domestic support that are allowed even though they distort trade—up to 5% of the value of production for developed countries, 10% for developing.
“In contrast, most developing members have access only to de minimis resulting in a major asymmetry in the rules on agricultural trade," the joint proposal added.