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The Indian delegation, led by commerce minister Anand Sharma, is approaching the WTO Ministerial in Bali with a begging bowl. The government has agreed to the so-called peace clausea euphemism for not taking any penal action for violating commitments under Agreement on Agriculture (AoA)proposed by WTO Director General but with the caveat that this will remain in place until a permanent relief is granted.
Indias concurrence with the peace clause proposal of DG tantamounts to conceding that India has committed a violation but would want WTO to alter rules to allow developing countries to maintain agricultural subsidies in excess of 10% of agricultural GDP. This has catapulted developed countries to a position from where they resort to aggressive posturing. They are willing to grant immunity from penal action for only four years. But they refuse to promise a time-line as to when the permanent relief will come. They merely say this will be taken up for discussion at the next Ministerial in 2017. In other words, there is no guarantee that immunity will continue beyond four years even as India and other developing countries in the G33 club want it for an indefinite period without any break. Even for granting this interim relief, developed countries are insisting on a plethora of conditionssubmission of data on food procurement, stockholding, distribution and subsidies (including their computations) etc. These also include a demonstration that the subsidies are not trade-distorting.
Juxtaposed with the above conditionssome of these nearly impossible to complyeven the so-called interim relief would become redundant. And we would have a collateral damage of subjecting our entire food security system to monitoring and surveillance by WTO.
So, what is this violation of WTO rules that India is worried about; a worry that has pushed our negotiators/strategists bending backwards and accept conditions that were not there even in AoA?
The trigger is the Food Security Act (FSA), which will result allegedly in Indias agricultural subsidyAMS (aggregate measurement support) in WTO parlanceto exceed de minimis 10% that developing countries can maintain under AoA (1995).
We need to be clear what is AMS? How it is determined as per WTO formula? Which subsidies are exempt from reduction commitment? Is subsidy under FSA exempt?
AMS has two components: (1) Product-specificthe excess of price paid to farmers over international price (external reference price, ERP) multiplied by quantum of produce; (2) Non-product-specificmoney spent on schemes to supply inputs viz. fertilisers, seeds, irrigation, electricity at