The farm deal that needs to be reworked

News: This article discusses the vital issues related to agriculture that the government needs to keep in view while formulating the country’s strategy for future negotiations on agriculture-related matters in various WTO forums.

Why AoA of WTO needs to be reviewed?

One, Agreement on Agriculture (AoA) under the World Trade Organization (WTO) and its amendments at the biennial ministerial meets has not been able to provide a level playing field for agricultural trade between developing and developed countries.

Two, the agreement has numerous asymmetries which adversely affect the interests of small-holder farmers of developing countries. They are not able to access broader market for their farm produce to realize better prices.

Three, other issues such as domestic support to farming, export facilitation subsidies, and grain stockholding for food security also remain unresolved. Hence, AoA needs to be reviewed to ensure a rule-based, fair and equitable trade regime.

Four, the AoA was crafted when negotiators from developing countries did not fully appreciate the needs of the farm sector. For instance, Indian officials were mostly from the commerce ministry and farm experts were not consulted. Also, the agriculture ministry was not kept in the loop.

Five, negotiators from developed countries dominated and hence they managed to safeguard their commercial interests. Developing countries were just viewed as the prospective markets for their industrial and agricultural goods.

Six, this accord also left enough space for the rich nations to raise their farm subsidies (aggregate measure of support, or AMS). 1986-88 was accepted as benchmark to measure this support which allowed rich nations to increase their financial assistance to their farmers.

The developing countries were only permitted to continue their ongoing support programmes for a limited period. This resulted in overproduction of many farm goods in developed countries and depressed the global prices.

For instance, flaws of AoA did not allow India to take up welfare measures for the growers and end-users. India is also dealing with many disputes at the WTO regarding its support programmes for agri-commodities.

What is the way forward?

First, the National Academy of Agricultural Sciences (NAAS) has brought out a policy paper on WTO-related issues. It has suggested to develop a road map for negotiations to seek redress for the existing drawbacks in the AoA.

Second, there is need to revisit the aggregate measure of support entitlements which enable the developed countries to provide high trade-distorting benefits under the special provision called “Amber Box”.

Third, the period of “reference prices” that is 1986-88 also needs to be updated. It affects the minimum support prices a country like India can provide to its farmers.

Fourth, the developing countries should oppose any step that aims to dilute the special and differential treatment provisions. The advanced nations have been seeking to cap the support under the “Development Box” which would mean curtailing the minimal domestic support the developing countries can provide even if it distorts the trade.

Source: This post is based on the article “The farm deal that needs to be reworked” published in Business Standard on 21^st Feb 2022.