India wants WTO rules on foodgrains to be scrapped

According to people familiar with the matter, India plans to seek an end to trade rules that have allowed developed countries to monopolize global agricultural exports and prevented developing countries from fair access to export markets.

At the next World Trade Organization (WTO) ministerial meeting to be held in Abu Dhabi, India will seek removal of its “further final binding aggregate support amount” (FBTAMS) status. These are fixed additional allowances above the “minimum limits” under the rules of the WTO Agreement on Agriculture (AoA).

In trade parlance, a “floor ceiling” refers to the minimum amount of domestic support that a country is allowed to receive, even if it distorts world prices. These are set at 5% of production value in developed countries and 10% in developing countries.

This is an issue that has caused considerable friction over the years, with New Delhi recently announcing that the Indian government’s Minimum Support Price (MSP) program, or public The Ukraine war, when we had to defend the prices at which food grains were procured for stock holdings.

“India believes that any negotiations on domestic support must first address the existing asymmetries and imbalances in the WTO Agreement on Agriculture (AoA). Therefore, to discuss the discipline on domestic support for India , we must start by removing historical asymmetries in domestic support,” said the person quoted above.

“India is advocating for leveling the playing field by abolishing the FBTAMS qualification enjoyed by many member states. This would give member states more than minimal support and We will be able to provide very flexible support to focus on specific support.”

However, there has been resistance to discussion on this issue, and actual negotiations have not even begun at the WTO.

According to the think tank Third World Network (TWN), developing countries remain the “main source of inequity” in the AoA and should therefore strongly raise the issue of discipline in FBTAMS qualifications.

TWN said: “There is a clear absurdity in granting a small number of countries huge additional rights that give them a huge advantage over all other poor countries in terms of policy space.”

This inequity also underpins many other issues on the negotiating table, such as public shareholding (PSH) and special safeguard mechanisms, that developing countries want addressed.

India is regularly questioned by major foodgrain exporters such as the United States and Canada over its PSH program, particularly because it receives heavy subsidies for rice.

India has repeatedly invoked the WTO’s peace clause for violating the 10% subsidy cap on rice procurement.

India argued before the WTO Agriculture Committee that it does not export regular paddy procured under the MSP program. The official added that the company mainly exports high-grade rice, which is in demand around the world.

Questions sent to a Department of Commerce spokesperson had not been answered as of press time.

India had reported to the WTO that its rice production in 2019-20 was $46.07 billion, and that it had provided subsidies worth $6.31 billion (13.7%), exceeding the 10% limit.

India, along with a group of developing and African countries, is also proposing a permanent solution to public stockpiling of food grains that would provide flexibility to pay higher amounts of agricultural support.