International Institutions

Please Review.

KEY POINTS

Challenges

·         Agri-Subsidy Issue - There is a plan by Indo-China joint proposal with the backing of over 100 developing countries.

·         This is to vouch for the elimination of trade-distorting farm subsidies worth $160 billion in several industrialised economies.

·         This is seen as a prerequisite to address the prevailing imbalance in the WTO ‘Agreement on Agriculture (AoA)’, which unfairly benefits developed countries.

·         Public Stocking - Countries like US & Canada insist on restricting public food grains stock-holding programs.

·         They believe large public stock-holdings and subsidies like ‘Minimum support Price (MSP)’ & ‘Public Distribution System (PDS)’ will distort the market.

·         But most developing countries (G-33 coalition) consider large stockholding is needed to strengthen their food security.

·         G-33 coalition (Indonesia, China & India etc.,) is hence not willing to either restrict stocking or scrap subsidy programs for poverty-alleviation.

·         Bali Peace Clause - While the stock-holding issue came up in the 2013 Bali WTO plenary, a temporary peace clause was agreed upon for 4 years.

·         It said that, till 2017, no country would be barred from food security programmes even if the subsidy breached the limits specified by WTO. 

·         As a solution has not been reached yet, countries that have such food security programs face the risk of legal prosecution.

·         EU & Brazil seem willing to endorse the G-33’s position on public stock-holding but, in return for support for reduction in trade-distorting subsidies.

·         Fisheries Subsidy Issue - WTO is considering proposals on prohibiting certain fisheries subsidies as these led to over-capacity and overfishing.

·         Many developing countries such as India and Philippines seek flexibility in granting subsidies.

·         India provides subsidies in the form of support for motorisation of fishing boats, fuel rebates and infrastructure support.

·         Notably all of this fall under the targeted subsidies list at the WTO.

·         U.S. factor - U.S. is currently being piloted by an administration that seeks to undermine the WTO and is increasingly protectionist in its approach.

·         U.S. is already exploring unilateral alternatives to the formal dispute resolution mechanism of the WTO to settle trade conflicts with partners.