At the upcoming WTO’s Ministerial Conference, India has decided not to agree to severe restrictions on its right to give price subsidies to farmers through the Minimum Support Price (MSP) to procure grains from them for food security purposes. Food security and protection of low-income and resource-poor farmers are top priority items for India at the WTO meet.
Currently, an interim mechanism called the ‘Peace Clause’ is in place, as per which WTO members had agreed not to challenge developing nations at the WTO Dispute Settlement Mechanism if they breached the cap of the product-specific domestic support (which is 10% of the value of production). The ‘Peace Clause’ is available to the developing nations, including India, till a permanent solution is found to public stockholding for food security purposes.
Why is it difficult to invoke peace clause?
The ‘Peace Clause’ is difficult to invoke even in its current form because prior to using it, the country concerned will have to first admit that it ‘is breaching’ or ‘is about to breach’ the ceiling entitlement to give product-specific domestic support. Also, the ‘Peace Clause’ can be used only for public stockholding programmes that have been in existence on the date at which it was agreed upon at the Bali Ministerial Conference in December 2013, and not for new programmes on public stockholding for food security purposes.
The prospects of an agreement on a permanent solution are not that bright due to three roadblocks.
First, the U.S. has not been engaging actively on the matter till recently, and if the U.S. does not give its nod, it will be difficult to arrive at a decision.
Second, the European Union has tried to link the permanent solution with outcomes including stringent disciplines on the domestic support given by developing nations.
Lastly, most WTO members are of the opinion that there should be a commitment to the prohibition of exports from public stockholding saying such exports would be trade-distorting.