WTO rules on foodgrains must be updated

News: About 60 countries, including India and China, have pushed for a joint proposal for consideration of several WTO rules. The proposal was pushed at the upcoming 12th ministerial summit of the World Trade Organization (WTO).

The proposal has been moved to solve some of the contentious issues linked to, food stockholding, agricultural subsidies, international trade, and humanitarian aid.

What are the aspects that have been proposed to change in the computation of farm subsidies?

WTOs methodology still uses 1986-88 prices as the benchmark.

Existing provisions regarding permissible subsidies are fixed at present at a maximum of 10 percent of the value of the produce.

Peace clause

WTO’s Agreement on Agriculture (AoA), has failed to deliver on its aims to remove trade barriers, promote transparent market access, and integrate global markets. AoA has been criticized for its tilt toward the developed countries.

What are the reasons behind pushing for these reforms?

First, the proposal has been supported not only by food-exporting but also by food-importing countries of Asia, Africa, and the Pacific regions, including India, China, Egypt, Indonesia, South Africa, and Pakistan.

Second, the present rules were mainly negotiated and drafted by the US and the European Union. The negotiators from the developing countries were mainly officials from their trade ministries, who were not allowed to have much say in these negotiations.

Third, the reference period for the calculation of subsidies 1986-88, favored developed countries. It allowed them greater leeway to increase their support to the farmers while denying the similar space to developing countries. Thus, the reference period requires updation.

Fourth, the proposal permits exports of foodgrains from public stocks to meet the urgent needs of food-stressed countries.

Lastly, it envisages greater flexibility for developing countries to formulate their policies concerning the production, acquisition, and stocking of foodgrain. It will promote the domestic food security of developing countries.

Source: This post is created based on the article “WTO rules on foodgrains must be updated” published in Business Standard on 8^th June 2022.