Wednesday, December 25, 2013

Contrary to whatever Union Commerce Minister Anand Sharma said about the success of India at the WTO Ministerial in Bali, the actual picture is completely different picture. 

India has wilted under pressure from the US and agreed to accept conditionalities that were not part of the G-33 proposal. This is clear from the text of the agreed draft.

What India has traded away:

1. Anand Sharma had unambiguously stated that the “peace clause” should be in place till such time that a permanent solution is found. The word “interim” that he had used is in the text (a clear victory), but in what is being described by the WTO Secretariat as “constructive ambiguity” the US position that it should be only for four years also finds its place (Para 1) in the text by adding, “for adoption  by the 11th Ministerial Conference” (there is a WTO Ministerial once every two years and Bali was the 9th Ministerial. (Some experts though are interpreting it as being in India’s favour since “interim” can be interpreted as holding on till a permanent settlement is found irrespective of the reference to the 11th Ministerial).


2. While India (G-33 draft) had demanded that no member-country can drag a member-state to the dispute settlement mechanism, till a permanent settlement is found under the Agreement on Agriculture (AoA) and the Agreement on Subsisdies and Countervailing Measure (ASCM), only the AoA is mentioned in Para 2. which means that member-states can still drag India to the dispute settlement process under the ASCM. The language has also been whittled down and instead of “shall not” replaced with “shall refrain from”, which means this guarantee is not secure even under the AoA.


3. Most disturbingly, this agreement is (Para 2) only “in pursuance of public stockholding programmes for food security purposes existing as of date”. This has the following implications:

(a) The Minimum Support Price Mechanism cannot be introduced for crops other than those already provided for.

(b) The quantity of foodgrains procured under the MSP cannot be increased beyond the procurement as of date which would threaten the NFSA in the near future.

(c) Pulses, cooking oil and other foods (other than rice, wheat or millets specified in the NFSA) can no longer be introduced in the PDS either by the Government of India or the State governments if they are not being provided now.

(d) Future governments cannot increase the entitlements of foodgrains guaranteed under the NFSA which has been notified. For instance, Chhattisgarh, amongst other States, provides 35 kgs per household but no other State which is now providing 20 kgs or 25 kgs can increase the quantity to 35 kgs.

(e) This may also be interpreted to mean that Government of India  or the State Governments cannot increase the price of the MSP from beyond what has been specified now for the next four years.


4. India will now be subject to requirements that have been made mandatory in the agreed text. This was there in the US/ EU text but not in the G-33 proposal which means that India has accepted to provide details of all holdings in procurement by both the States and Government of India.


5. India will also now have to notify that they have been exceeding the de minimis level (10 per cent of agricultural production as the permissible subsidy for developing countries). Para 3 (a)


6. Para (4) is one of the most problematic propositions for India which has made its way from the US/ EU draft, “shall ensure that stocks procured under such programmes do not distort trade or adversely affect the food security of other members”. This leaves open to interpretation that the entire MSP mechanism that is in place for decades and India can be dragged to the dispute settlement mechanism by the US alleging that the entire MSP mechanism distrorts trade. So can Pakistan alleging that India’s rice exports is distorting trade.


7. This also means that even with the most generous interpretation of this agreeement, India will still have to continue negotiations for the next four years till a permanent settlement is done and we have to continue to agree to further concessions to the US/ EU while this is being negotiated.


8. In Bali, the African Group, many members of the G-33 and LAC are very upset with India for having produced bilaterally with the US a text, whereas till this morning, they were seeking the support of all the countries for the G-33 and Indian position. Anand Sharma had taken a strident note till last night, and raised the hopes of most developing countries that India would not buckle to pressure from the US/ EU. Today his credibility and that of India is severely eroded.


Moral of the Story !!!!

As is evident, what is contained in the agreed text is a big climbdown from what had been stated by Anand Sharma in his strongly-worded statment. We have put at stake not just the interests of 650 million Indian farmers but also every single one of the 820 entitlement holders under the NFSA.


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