View: Making food security a fair game
Everything the WTO does becomes superfluous if it fails in the important constituency of developing countries whose survival depends on agriculture. The survival of the WTO, in turn, depends on the ability of MC12 to address the historic injustice of agriculture on the food security front.
The most important in a long list of historical injustices allowed by the WTO includes the flawed formula for calculating the Aggregate Measure of Support (AMS). The definition and method of measurement adopted for
in the Uruguay Round in 1986-1994 were problematic. The text of the Agreement on Agriculture (AoA) calculates export subsidies with the period of the base year 1986-88, and allows major suppliers of export subsidies to continue with that support. On the other hand, it does not allow any country to re-grant export subsidies if the country has not granted an export subsidy in the base year or notified such provisions for the base year in its list.
The implementation of this flawed AMS formula has led to indiscipline in domestic support for agriculture in major OECD countries. As a result, the WTO has failed to achieve one of the main goals due to strong resistance from the developed world – reducing the distortion in agricultural trade and regulating the subsidy regime. EU and US dominance in agricultural markets is maintained through a mix of domestic support, WTO-mandated special safeguard mechanisms, and a host of non-tariff barriers such as sanitary measures and phytosanitary and technical barriers to trade.
India maintained that its AMS was negative, this too to a very large extent, and therefore the issue of notification did not arise at that time. In addition, with the existing base year, inflation is not taken into account and the administered price – as opposed to the market price – is counted as “support”. This reinforces injustice, as farm incomes are extremely low in India and are increasingly vulnerable to the impacts of climate change.
In April 2021, India notified that it had exceeded the small-scale (de minimis) level for rice for MY 2019-2020. The non-fulfillment of India’s commitment to traditional staple food crops, under Article 7.2 (b) of the AOA, is linked to the support provided under the public storage programs to food safety purposes aligned with the decision taken at MC9 in Bali in 2013. Transparency standards should also set similar benchmarks for developed countries.
India is representative of the developing world, for which a very large part of its population depends on subsistence agriculture. The Indian Food Security Act (NFSA) of 2013 legitimized support for smallholder farmers and public stockholding for food security. The fact that the country is defending the cause at the WTO, in particular in the Bali “peace clause”, reflects this priority. As the Covid-19 pandemic continues to wreak havoc on the lives and livelihoods of smallholder farmers, finding a permanent solution to the problem is a priority.
Such a solution must be fair, with adequate lessons learned from the past so that a disaster like the AMS formula does not repeat itself. Any attempt to block progress on the public storage route would mean the failure of trade negotiations. Agricultural negotiations at the WTO have failed to converge the issue of domestic support, with strong resistance from the main agricultural exporting countries. India, along with several other developing countries, has made it clear that any meaningful WTO reform process should involve removing existing imbalances in the ASA and ensuring a level playing field.
As the WTO celebrates its 25th anniversary under trying circumstances of Covid, it is important to reconsider the need to make the organization relevant and contemporary. The AoA will need to be reformed to discourage 20th century style production structures and create new incentives to access modern and profitable technologies for greener and more sustainable agriculture.
Saha and Chaturvedi are Associate Professors and Director General, Research and Information System for Developing Countries (RIS), New Delhi.