Indo-China joint proposal on WTO

What is the issue?

• India and China has reiterated its support for a joint proposal by the nations at the World Trade Organization (WTO).
• The proposal assumes importance in view of the ongoing negotiations for the upcoming WTO Ministerial Conference in Buenos Aires, Argentina.

What is this Joint proposal is about?

• The countries had jointly submitted a proposal to the WTO calling for the elimination of the most trade-distorting form of farm subsidies.
• This is against farm subsidies provided by rich nations to their farmers.
• The India-China proposal had targeted 'Aggregate Measurement of Support' (AMS) or 'Amber Box' support in WTO parlance.
• This counters efforts by rich nations led by the United States, EU and Brazil to target the subsidies of the developing countries.

What is the need for such proposal?

• Developed countries have been consistently providing trade-distorting subsidies to their farmers at levels much higher than the ceiling currently applicable to developing countries.
• The proposal reveals that subsidies for many of these items are over 50 per cent with some even having more than 100 per cent support.
• Developed countries have more than 90 per cent of global AMS entitlements amounting to nearly $160 billion.
• On the other hand, most developing nations, including India and China, do not have AMS entitlements.
• Again, developing countries are forced to contain it within 10 per cent of the value of production.

What is India’s Stand over Agri subsidies?

• India provides a subsistence amount of about $260 per farmer per annum compared to over 100 times more in some developed countries.
• Following India's agreement with the US on the issue in 2013, the Bali Ministerial Conference came up with the "peace clause".
• It permitted uninterrupted implementation of India's food security programme till a permanent solution was found.
• On this issue, India has informed the WTO that its input farm subsidy which includes those for fertilisers, irrigation and electricitydid not go beyond the permissible limit.
• These are part of the 'green box' or non-trade distorting subsidies that are allowed without limits for countries such as India which has millions of poor farmers.
• For a permanent solution, India has proposed either amending the formula to calculate the food subsidy cap of 10 per cent, which is based on the reference price of 1986-88 or allowing such schemes outside the purview of subsidy caps.

What are the challenges for India in WTO?

• BRICS nations have proposed an Investment facilitation, which brings transparency in investment facilitation on a voluntary basis.
• Among BRICS, only India is not ready in taking up the Investment facilitation plan to WTO.
• Reacting to the proposal, Brazil and the European Union have already came together calling for a crackdown on exports of food stocks meant for public stockholding.
• Apart from Brazil, Russia and China, there are a large number of other traditional supporters of investment facilitation at the WTO such as Japan, Switzerland, the EU, Canada and New Zealand

Source: Business Standard, Business Line