The Great Divide: WTO Brings Out The Differences

The Great Divide: WTO Brings Out The Differences

Even as Indian stands firm in the WTO meet, international pressure is tremendous to bow down to the view of the developed world. Indian Ambassador to the WTO Ms Anjali Prasad has reiterated that India will not accept easier custom rules from developed countries till the food subsidy concern is addressed. Prasad was addressing a meeting for the approval of the Trade Facilitation Agreement in Geneva has indicated that Indians cannot risk food security and the adoption of the TFA should be kept to one side ill a solution for the public stock holding on food security is found.

India is firmly of the view that a new agreement's finalisation should only be following the acceptance of the WTO to change rules on government food subsidies. The government has to cap food subsidy at around 10% of the production value. But value is based on prices prevalent in 1986-1988. Considering that we are now in 2014, the Indian demand is reasonable. With erratic rain become a reality in India, public stock holdings of food grains need to be held to help farmers and combat price fluctuations. During December at Bali WTO members had indicated they would hear India's voice. But now an attempt is being made to silence it. The deal was drafted such that the TFA is finalised by July end while the final decision on food security and issues of concern to LDCs is relegated to a later date .

If the TFA compromises our food security , we are looking at a massive food crisis. India has made it clear that it will not give in to pressure from the Western world over WTO trade protocols on this issue. It is not just India but also other developing countries which are questioning their more privileged brethren. There is a clause in the TFA which says farm subsidies cannot rise more than 10% of the agricultural production value. Should the cap be breached, other members can pose a challenge and even impose trade sanctions on the hapless nation. Without subsidies, the food security of the developing world will be seriously damaged. While no legal sanctions can be imposed on developing nations till 2017, interim relief is not applicable if subsidies lead to trade distortions.

Indian diplomats are clearly looking at the bigger picture through their steadfast refusal to succumb to the pressure. Consider India's case. Our Food Security Act is legally binding which means state has to provide food to vulnerable parts of the population at really cheap rates. Apart from providing consumer subsidies, through a PDS it also provides subsidies for food grain producers. The complication of MSP and subsidy inputs complicate the picture further. Problem Number 1 is that 10% cap on subsidies cannot be achieved by India. Adding to the problem is the fact that the cap is calculated on outdated prices of 1986-88 where food grain prices were much lower. A sensitive issue is that India will have to open out its stockpiling to international monitoring. Riders in the peace clause prevent addition of protein heavy grains. G33 nations such as China are supporting India's stand .

WTO's stand stems from other concerns. It says if developing countries continue to give prices to farmers which are higher than market prices, poor farmers in other parts of the world will be affected. Adding to their argument is the contention that this deal can add $1 trillion to the global GDP and generate 21 million jobs. An Australia-led 25 country group have asked India not to veto the Trade Facilitation Agreement (TFA) of the World Trade Organization (WTO).

India faces a tough fight ahead. With the issue of possible US trade sanctions hanging like the sword of Damocles on our nation's head though no nation can supersede WTO resolution of disputes, India will not have an easy time of it . But the divide between developed and developing countries has been growing for some time now. As income inequalities between the have and have-not nations rise, confrontations are bound to escalate. This even mirrors the eternal fight between the rich and poor in a world where there are limited resources and unlimited problems.