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EU asks for cap on PDS spending in return for food security deal -D Ravi Kanth
-Livemint.com

Brussels suggested more burdensome, stringent conditions for the permanent solution than what were agreed as part of interim solution in the 2013 Bali summit

Geneva: The European Union (EU) has insisted that India must accept a financial cap on market price support programmes if New Delhi wants a permanent solution for the public stockholding programmes for food security at the Nairobi meeting of the World Trade Organization next week, according to people familiar with the development.

In an audacious proposal that is rarely heard in global trade negotiations, the EU has indicated that Brussels will accept a permanent solution for exempting the acquisition of foodstuff at administered prices on the condition that New Delhi agrees to a financial cap on the public distribution programmes regardless of economic and developmental challenges, said a person who asked not to be identified.

During closed-door meetings over the past five days, the EU also suggested more burdensome and stringent conditions for the permanent solution than what were agreed as part of the interim solution in the 2013 Bali ministerial decision. The US remained silent during these meetings when the EU floated the proposal for a financial/quantitative cap on subsidy programmes involving the acquisition of foodstuff at administered prices, the person said.

India rejected the EU’s argument on the ground that public stockholding programmes are critical for the continuation of farming for low-income and resource-poor farmers in developing nations.

India asked whether the EU and the US are also prepared to accept such a cap for the trade-distorting international food aid which is causing havoc in the international market and many developing and poorest countries, particularly in Africa.

At another closed-door meeting convened by the chair for Doha agriculture negotiations on 5 December, Australia, Paraguay and Canada presented what is called room document in which they argued that they are not required to find a permanent solution at the Nairobi meeting as per the Bali Ministerial Declaration of December 2013.

At the Bali ministerial, trade ministers set a deadline for finding the permanent solution by end-2017, at the 11th ministerial meeting, while members at the General Council had mandated concerted efforts to resolve this issue by agreeing to a permanent solution by 31 December.

India reminded Australia, Paraguay, and Canada that the General Council decision had mandated members to make a concerted efforts for finalizing the permanent solution prior to the 10th ministerial conference which is starting in Nairobi on 15 December, according to people familiar with the meeting.

At the same meeting, the US maintained that concerted efforts do not mean that members have to agree to the G-33 proposal.

The proposal of the G-33 group, led by Indonesia and including India, China, the Philippines and 43 other developing countries, has called for amending the WTO’s agreement on agriculture by inserting a new annex six to cover the domestic subsidies underpinning the public stockholding for food security purposes.

It says programmes for the acquisition of foodstuff at administered prices by developing and poorest countries “with the objective of supporting low-income or resource-poor producers”, and for subsequent distribution at subsidized prices with the objective of meeting food security requirements shall be exempted from subsidy reduction commitments.

In his report to the General Council on Monday (7 December), WTO director general Roberto Azevedo spoke about the ongoing consultations convened by the chair for Doha agriculture negotiations Ambassador Vangelis Vitalis on public stockholding programmes and the special safeguard mechanism.

On public stockholding programmes, Azevedo said the G-33 proposal “still does not adequately address a varies of concerns, both systemic and trade-related”.

Commenting on the special safeguard mechanism (SSM), the director general said there are “sustained divergent views, the negotiations on this issue have reached an impasse”.

“The latest consultations (by the chair), based on the proposed texts (of the G-33), have not so far taken us much close to convergence, but as with the SSM, work continues in various format,” the director general maintained.

Azevedo also noted that there is a large list of issues in the export competition pillar such as the timeframes and conditions envisaged for the elimination of export subsidies, repayment terms in the area of export finance, coverage of self-financing provisions and monetization in food aid which are still unresolved. But there is a growing view among a large majority of developing countries that a concerted attempt is now being made by some powerful countries to deny the permanent solution for public stockholding programmes for food security and the special safeguard mechanism for developing countries to counter unforeseen surges in imports of agricultural products, an African trade official said, requesting anonymity.