India wants WTO rules on foodgrain scrapped

India will seek the removal of entitlements in trading rules that have helped developed countries dominate global farm exports and obstructed developing countries’ fair access to export markets, a person aware of the development said.

At the next World Trade Organization (WTO) interministerial meeting in Abu Dhabi, India will seek the removal of ‘additional Final Bound Total Aggregate Measurement of Support (FBTAMS) entitlements’. These are fixed additional allowances over the ‘de minimis limits’ under the rules of the WTO Agreement on Agriculture (AoA).

In trade parlance, ‘de minimis limits’ are the minimal amount of domestic support that is allowed a country even though it distorts global prices. These have been set at 5% of the value of production for developed countries and 10% for developing nations.

This has been a matter of considerable friction over the years, most recently when New Delhi had to defend its minimum support price (MSP) programme—the price at which it procures foodgrains for public stock holdings—amid a looming global food crisis caused by the Ukraine war.

“India believes any negotiations on domestic support needs to first address existing asymmetries and imbalances in the WTO Agreement of Agriculture (AoA). Thus, discussing disciplines on domestic support for India must begin with the removal of historical asymmetries in domestic support,” the person cited above stated.

“India advocates levelling of the playing field by eliminating the FBTAMS entitlements enjoyed by many members, which allow them to provide support beyond the de minimis limits and vast flexibility to concentrate product-specific support.”

However, there has been resistance to any discussion on this issue, and no actual negotiations have even started in the WTO.

According to Third World Network (TWN), a think tank, developing countries should strongly raise the issue of disciplining FBTAMS entitlements as they remain “the primary source of inequity” in the AoA.

“There is glaring irrationality in allowing gigantic additional entitlements for a few countries that confer massive advantages to them in terms of policy space over all other and poorer countries,” TWN says.

This inequity also underpins many of the other issues on the negotiating table, such as public stock holdings (PSH) and special safeguard mechanisms that developing countries have asked to address.

India is regularly questioned by large foodgrain exporters such as the US and Canada over its PSH programme on the grounds that it is highly subsidized, especially for rice.

India has invoked the ‘peace clause’ several times at the WTO for breaching the 10% subsidy ceiling on rice procurement.

India has argued at the WTO’s Committee on Agriculture that it does not export common paddy, which it procures under the MSP programme. It mainly exports premium quality rice that is in demand the world over, the official added.

Queries sent to a spokesperson for the commerce ministry remained unanswered at press time.

India had informed the WTO that the value of its rice production in 2019-20 stood at $46.07 billion and that it gave subsidies worth $6.31 billion, or 13.7%, which is above the 10% limit.

India, along with a group of developing and African nations, has also proposed a permanent solution to public stockholding of foodgrains that would give them the flexibility to pay out higher farm support.