29th November 2013
Honourable Shri Manmohan Singh je
Prime Minister of India
Subject: Don’t Compromise Farmers Price Support (or MSP) in WTO - Reject Peace Clause; Protect India from Dumping of subsidised food from West - Reject Trade Facilitation (in reality Import Facilitation)
We are extremely concerned and upset over the ongoing negotiations in Geneva on the G-33 proposal on Food Security and Indian government accpetance of Peace Clause, a time bound immunity against penalty for breaching the 10% ceiling on farm subsidy provided to developing countries like India in the WTO.
It is quite sad that the UPA government in a hasty move agreed for this temporary reprieve instead of holding to its original position for a permanent solution through changes in the Agreeemnt on Agriculture (AoA), i.e. allowing such subsidies under the green box, which contains no conditionalities on subsidy limits. This would have removed the imbalance in AoA, whereby the developed countries have the flexibility to provide very high amounts of subsidy directly to their population in the form of food stamps, but developing countries are unable to meet similar objectives.
By accpting the Peace Clause India may facilitate conclusion of the deal on Trade facilitation and successful end of the WTO Ministerial in Indonesia next month. But the UPA government and the Congress Party will be condemned for compromising price support system (or MSP) for Indian farmers which provides livelihood support to millions of subsistance farmers and ensures adequate food production for public stockholding essential to run the food security programme in India, home for one third of world’s hungry population. As an eminent economist, it must be clear to you that India can ensure food security only by supporting both production and consumption. Weakening the production, as the Peace Clause is bound to do, will not help food access. The Indian government has to defend its right to freely procure food from 600 million farmers and get it across to its 870 million hungry people in the country.
Does the Peace Clause, as accpeted under the draft text on “Public Stocking for Food Secuity Purposes”, protect India against any legal action for breaching the limit for food subsidies? Not at all. The proposed ‘Peace Clause’ is only meant for four years, till the 11th Ministerial (2017), and is not completely immune to challenges because it simply asks countries to ‘refrain’ from taking others to the WTO’s Dispute Settlement body. Secondly, the ‘Peace Clause’ will not adequately shield developing country governments engaged in public stockholding programmes from being brought to the WTO’s dispute settlement understanding (DSU). This is because it does not include within its scope the Agreement on Subsidies and Countervailing Measures (ASCM). India and other developing countries engaging in public stockholding programmes and purchasing staples from their producers can still be taken to the WTO’s dispute settlement body under the ASCM. Hence it is extremely weak and undeplomatic trade off to sacrifce the livelihod security of farmers and food secuity of poor and hungry for a protection in the form of Peace Clause which can easily be smashed under another agreement (ASCM).
Another major limitation which further weakens the Peace Clause is the assertion in the draft text which says that any developing country member having such public stockholding programmes ‘shall ensure that stocks procured under such programs do not distort trade’. This will certainly encourage developed and large grain exporter countries, which are trying hard to gain market access in India, to declare Indian public procurement programme as trade distorting. We therefore urge you to reject the ‘Peace Clause’ that does not shield India and other developing countries from being challenged.
All this will severely impact the Price Support system for 600 millions subsistence farmers in India who are dependent on agriculture. Withdrawing the price support for farmers or freezing it at the de-minimis level of 10 percent as applicable under the Agreement on Agriculture will make farmers vulnerable to the vagaries of the market. And more importantly, it will completely jeopardize the dream food security programme of the UPA government. The much-hyped food security for Indians will eventually come to a nought in just four years till the time the Peace clause will be effecive.
Even though, the WTO members have agreed for a permanent solution but what is the guarantee that the developed countries would accept for a amendement in the AOA post 11th Ministerial. It will be very difficult to make all 159 WTO members agree and deliver on their commitment. By accpeting Peace Clause we would loose the bargining chip in the form of Trade facilitation which may get cleared in Bali. The developing countries would loose the opportunity of amending the AoA on subsidies. Once the Developed countries dream proposal on Trade Facilitation is cleared in Bali, they would never support any proposal for change in AoA Rules. And we may not have an effective issue for trade off then as we have in trade facilitation agrement today.
The EU and US interest in WTO is to get market access in the developing countries, while at the same time proetct their farmers and agribusiness through doling out huge subsidies. In last 18 years of WTO regime, the US and EU have not fulfilled any of their commitment on redcution of their subsidies, rather are openly continuing their domestic subsidies as well as export subsidies. They have not complied with the 20 per cent reduction of AMS, and have shifted most of their farm subsidies to the Green Box and even increased them without limits. The US has more than doubled its subsidy from 61 to 130 billion USD between 1995 and 2010, while EU’s subsidy of 90 billion Euro (1995) came down to 75 billion Euro in 2002, but rose again to hover between 90-79 billion Euros between 2006-2009.
By objecting to Indian proposal on food security, the US and EU governments have demonstrated their unethical, immoral and unfair trade practice. Though they are against the subsidies given to small and marginal farmers as price support for food procurement to ensure a supply of just 60 kg of grain per person per annum to around 870 million people (under the National Food security act 2013) compared to 385 kg/person annually for food aid under several programmes like the food coupons, child nutrition programmes to around 80 million beneficiaries in US. In 2010 US spent USD 94 billion for its food aid programmes, which in 2012 reached $100 billion. Against this, India’s subsidy under the newly enacted food legislation is expected to be around USD 20 billion. Even this is not tolerable to the US and the EU.
Therefore, we demand that India must stand up and resist developed countries pressure. After all, it is India's responsibility to feed its hungry population as well as the ensure livelihood security for its 600 million farmers. Even if Bali Ministerial fails, India cannot compromise the fate of 2/3rd of its population. The hungry in India cannot be traded at the altar of development. This is the biggest ever price the people of India and other developing countries would pay for the survival of WTO. We can not allow the UPA government to mortgage Indian people right to food and the right to livelihoods of the poor and the needy enshrined in the Constitution. We therefore ask you to reject this Peace Clause and negotiate on the actual G-33 proposal. Given the numerous imbalaces and extremely unfair trade rules for developed and developing countries, we demand that agrculture must be kept out of WTO.
The price being asked to be paid at Bali for this Peace Clause is very high. For a very weak Peace Clause with full of conditions, developing countries have been asked in return to agree to a Trade Facilitation Agreement. This Agreement will be very expensive to implement for developing countries. In addition, it will increase imports for net-importing countries. This could end up as a challenge for local industries, will increase countries’ trade deficits, and lead to countries diverting scarce resources from more deserving budget priorities at the national level towards putting in place very onerous and unnecessarily elaborate customs procedures geared towards clearing the goods of exporters quickly.
Trade Facilitation, which is actually an ‘import facilitation’, is being agreed by India despite the fact that our trade deficit and our current account deficit have been growing. Several government agencies have cautioned India time and again about increasing trade deficit and current account deficit (CAD), which has been slowing down the Indian economy.
By signing on to the Trade Facilitation agreement, India will ensure widening of the trade deficit and Current Account Deficit, which would be disastrous for the Indian economy. It will also allow easy access to the subsidised agricutural commodities in India. We therefore urge you not to compromise our economy by supporting the Trade facilitation agreement.
Ch. Yudhvir Singh Rakesh Tikait
General Secretary Spokesperson
Indian Coordination Committee of Farmers’ Movement Bhartiya Kissan Union