Experts say removing export subsidies by 2023 is likely to worsen sugar sector crisis.
- India began its inter-ministerial consultations on the implications of the decisions taken at the last month’s WTO ministerial conference at Nairobi.
- The discussions revolved around the kind of support (subsidies) that will not be possible for the farm sector in years ahead and how India should respond to that.
- The outcomes of the WTO’s Nairobi meet include ministerial decisions on agriculture covering a SSM for developing countries (to counter import surges of farm items) and public stockholding.
- It also includes a commitment to abolish export subsidies for farm exports and measures related to cotton.
India secured a re-affirmative Ministerial Decision on the public stockholding issue.
- The Cabinet approved India’s stand at the last month’s WTO conference held in Nairobi on food security and farm exports.
- The outcomes of the conference, referred to as the ‘Nairobi Package’ include Ministerial Decisions on agriculture covering a Special Safeguard Mechanism (SSM).
- India negotiated a Ministerial Decision on another very important issue.
- This recognises that developing countries will have the right to have recourse to an agricultural SSM as envisaged in the Doha mandate.
- Members will continue to negotiate the mechanism in dedicated sessions of the Committee on Agriculture in Special Session.
The developing and the developed world failed to bridge their differences over farm issues as well as on whether to continue with the ongoing 14-year-old Doha Round talks.
- Developing countries demanded that the conference re-affirm the Doha Development Agenda.
- Developing countries want the final Ministerial Declaration to have an accelerated work programme on the SSM and food security issues.
- There were efforts to link a deal on SSM with that on export competition.
- The deal may have an LDC package, which would include duty-free, quota-free market access for LDCs, services waiver and preferential rules of origin.
- Some WTO members excluding India agreed on the timetable to implement a major deal to get rid off tariffs on 201 IT products.
Persisting deep differences between developed & developing countries will make job of ministers difficult in arriving at consensus.
- The ministerial conference (the WTO’s highest decision-making body) began in Nairobi at a time when the global trade body is celebrating its 20th anniversary.
- India want the protection of interests of poor farmers and a permanent solution for the issue of public stockholding for food security purposes to be addressed on a priority basis.
- They don’t want any dilution of ‘development’ dimension of the Doha Round through incorporation of ‘new’ issues of interest to the rich world.
- India’s demand to safeguard the interests of poor farmers and food security programmes has received support within the U.S.
- They urged the US to agree to a proposal on a permanent solution to the issue of food stocks programmes to support food security.
- They asked the US to agree to the revision of the baseline figures on public spending on agriculture to reflect current prices.
- Ministers from 162 member countries of the WTO will gather at the Nairobi during December 15-18 for negotiations meant for a deal to open up global trade.
- India has toughened its stance ahead of the WTO Nairobi ministerial meeting next month.
- The US, EU, Australia and Brazil blocked a proposal aimed at protecting millions of resource-poor farmers.
- These 4 countries rejected the special safeguard mechanism (SSM) being demanded by India along with 46 developing countries of the G-33 far coalition.
- The SSM is vital for protecting millions of poor farmers from the sudden and unforeseen surges in imports of farm products.
The next Ministerial meeting of WTO is to be held in December in Nairobi.
- That is our biggest opportunity for a permanent solution to bring predictability and symmetry in subsidy cap issue.
- What’s India’s stand?
- The WTO should update the reference price of 1986-88 that is used in the formula for calculating the food subsidy cap
- Either that or exempt schemes from the purview of subsidy caps.
WTO Nairobi Ministerial Meeting – What’s at stake for India?
Recently, the WTO Trade Ministers concluded their talks without any commitment on rich countries being asked to check their domestic subsidies. The negotiations exceeded by one day due to lack of consensus among the developed and developing world.
India and other developing countries were particular about the re-affirmation to conclude the 14-year old Doha Round. < Let's begin with the basics of WTO negotiations>
What is Doha Development Round?
It is the latest round of trade negotiations among the WTO members, which started in 2001, to sign a pact to open up world trade by lowering or eliminating trade barriers.
The focus is on helping developing countries join the global marketplace, and boost their economies as a result.
The Doha Round is also known as the Doha Development Agenda.
What are they negotiating?
The goal of any trade talks is to make it easier for goods and services to be bought and sold across national borders.
The negotiations includes:
- Restricting countries’ use of subsidies for farmers and fishermen.
- Lowering taxes and regulatory barriers that affect the cross-border trade in services, such as banking and consulting.
- Negotiating new intellectual property rules on things such as drugs and copyrighted works.
Why developing countries are pressing for conclusion of Doha round?
Basically, the benefits for developing countries depends on the the kind of agreement the negotiators come up with.
However, the developing countries are hoping that stronger restrictions on farm subsidies in developed countries would be good for farmers in the developing world.
What was the outcome of 2013 Bali Ministerial Meeting?
- Protection of the interests of poor farmers and food security.< This is what India wants to be honoured and implemented>
- Exporters from Least developing countries(LDCs), will get duty free, quota free access to markets in foreign countries
- Trade facilitation agreement, to ease the customs clearance.
What is Special Safeguard Mechanism and its need for poor & developing countries?
Basically, SSM will allow developing countries to temporarily increase the import duties on farm products, so as to counter the sudden increase in imports and price falls.< Actually, the developed countries have well-developed and mechanised agriculture along with that, huge subsidies are extended to farmers in these countries>
This mechanism would empower the developing countries to impose additional duties on agri-products, when their imports breach specified ceilings or price.
What’s the problem here?
The negotiations are on the extent to which different categories of developing countries will be allowed to hike duties using the SSM, beyond their tariff.
What are the new issues that have emerged?
- Rich countries are diluting the development dimension. Some developing countries are attempting to categorise nations such as India and China as emerging economies, instead of developing.
- The developed countries are also redefining the developmental aspects.
- Rich countries wanted to revitalise WTO by introducing new issues, often called emerging trade issues:
- Labour and environmental standards
- Global value chains and promotion of supply chains
- Competition & investment provisions
- Environmental and sustainable goods produced using clean and green energy
- Transparency in govt. procurement
- Transparency in state-owned enterprises and designated monopolies
< If these issues are included in the agreement, developing and poor countries feel that these standards or rules might become non-tariff barriers, hurting their exports>
What is India’s stand on these issues?
- India has made it clear that it will not undertake any binding commitments.
- The issues of labour and environment should be taken at concerned international bodies such as ILO and UNFCCC, not at WTO.
- India wants new issues should also include those with a development angle such as easier movement of natural persons, such as skilled professionals.
< Developed countries are fearing large scale migration, on account of increase in skilled manpower in developing countries such as India. India is looking for such concessions so that it's skilled manpower can find access to developed countries market.>
What was India’s demand at Nairobi Meeting?
- India wants the rich countries to drastically reduce their trade distorting farm subsidies.
- India wants on priority that a permanent solution to the issue of public food stock holding in developing countries for the purpose of food security.
- India is also looking for effective implementation of a package for LDCs including duty-free and quota-free market access.
What does draft declaration at Nairobi says?
- A commitment to allow developing nations to use special safeguards to protect farmers against import surges.
- It reflects India’s demand for a reaffirmation from all members to work towards a permanent solution on public stockholding.
- All countries agreed to the elimination of agricultural export subsidies subject to preservation of Special and Differential Treatment for developing countries such as longer phase-out period for transporting and export subsidies for exporting agricultural products.
- Developed countries have committed to remove export subsidies immediately, except for a few agricultural products, and developing countries will do so by 2018.
- However, developing countries will keep the flexibility to cover marketing and transport subsidies for agriculture exports until the end of 2023.
- The talks concluded without any commitment on rich countries to check their domestic subsidies.
- There was division among the WTO members on the issue of the reaffirmation of the Doha mandate.
- However, some of the WTO members excluding India agreed on the timetable to implement a major deal to get rid off tariffs on 201 IT products valued at over $1.3 trillion/annum, and accounting for around 10% of total global trade.