Peace Clause at WTO

Source-This post on Peace Clause at WTO has been created based on the article “Fifth time in a row: India invokes the peace clause for rice in WTO” published in “Business Standard” on 8 April 2024.

Why in the news?

India has invoked the peace clause at the World Trade Organization (WTO) for the fifth consecutive time. This is because India has breached the prescribed subsidy limit for rice offered to its farmers.

About Peace Clause

Introduction-At the Bali ministerial meeting in December 2013, WTO members agreed to temporarily implement a mechanism known as the Peace Clause. They also pledged to work on a permanent solution through negotiations.

Description- According to global trade rules, a WTO member country’s food subsidy bill shouldn’t exceed 10% of the value of production, based on the reference price of 1986-88. Subsidies over and above the prescribed ceiling are seen as trade-distorting.

Concerns- India has been complaining that 10 per cent subsidy ceiling is calculated on the basis of the reference price of 1986-88. This reference price has become outdated long ago.

Note-De minimis-This is the minimal amounts of domestic support that is allowed, even though it may distort trade. In case of developed countries, the de minimis limit or ceiling is up to 5 % of value of production and 10 % in case of developing nation.

Read more–WTO Reforms and India

UPSC Syllabus-International Organizations