Free trade can’t yet pass a basic food security test 

News: At present, the 12th World Trade Organization (WTO) ministerial conference is being held in Geneva. Food security is one of the agenda on the discussion table on the ministerial conference.

Importance of Free Trade

Free trade ensures that agricultural products flow from zones of abundance to regions of scarcity, just as the free exchange of ideas, goods and services. This eases hunger and maximizes nutrition.

What are the challenges?

Ultimate Challenge

Agriculture has always been the final frontier of trade, given national anxieties over food sufficiency. For example, India has been criticized for its ban of private wheat exports.

The governments are running a massive food security programme. They procure harvests from farmers at prices not determined by the market. This imposes ecological costs, results in fiscal bloat, and keeps grain supply out of sync with demand.

Proximate Challenge

The Ukraine War has led to barriers to free trade. For example, trade has been weaponized for geopolitical aims. The Ukraine war has led to a wheat-supply squeeze. Now the costs of farm input have soared up.  Over two-thirds of humanity is living in countries that are net importers of food. The United Nations recently estimated that 276 million people are at risk of starvation.

What are the issues with WTO farm subsidy rules?

There are issues in the 10% subsidy limit rule. It was calculated based on prices of 1986-88, when food was much cheaper.

The rule placed burdens on developing economies, while the rich world found various opportunities for its own farms. Therefore, in 2013, a tentative “peace clause” was inserted at the Bali meet. It granted immunities to the countries from being charged with 10% rule violation.

The Way Forward

As fair-trade requires a level playing field. Therefore, the elimination of distortive subsidies is a key enabler.

Today, the circumstances have changed. Therefore, the WTO’s subsidy rules need an update. The revised rules should be made on food stockpiling, which offers autonomy in assuring our people’s food security.

In general, India must foster free trade. India should adapt our farm sector to market forces. In other words, there is a need for market-oriented farm reforms.

Source: The post is based on an article “Free trade can’t yet pass a basic food security test” published in the Live Mint on 13^th June 2022.