The final text of the World Trade Organisation agreement at Bali is a victory for the WTO, which lives to fight another day, and industry, but it is not clear whether India’s 60 crore farmers will benefit. The final text on the food subsidy says a permanent solution would be found within four years and, till a final solution is found, members of the World Trade Organisation “shall refrain from challenging through the WTO dispute settlement mechanism... of the agreement on agriculture in relation to support provided for traditional staple food crops in pursuance of public stock holding programme for food security purposes...”
In effect, the problem has been postponed for four years and only time will tell whether India will get justice. For instance, the Agreement on Agriculture did not address the issue of the base period of 1986-88 as the reference year for calculating whether India oversteps the 10 per cent subsidy cap. Those prices were very low and should be changed to those around 2010 or later as inputs like fertilisers, pesticides, etc. have increased the cost of wheat and rice.
Another lacuna at the Bali ministerial meet was the failure to discuss the huge subsidies that the American and European farmers get from their governments. These subsidies are trade-distorting. Agriculture-related subsidies in developed countries increased from $350 billion in 1996 to $406 billion in 2011. Unless this is tackled, India’s exports of agricultural produce can never get a fair deal. For instance, the US in 2005 subsidised its cotton farmers to the tune of $4.6 billion, or `27,000 crore, and the Indian cotton farmer has to compete with lower US cotton prices. Brazil had filed a case with the WTO against US cotton subsidies that America lost. The dispute panel allowed Brazil to put countervailing duties. To circumvent this, America provided $147 million to Brazil every year. Why is India not able to make such deals?
Having said this, the trade agreement signed at the Bali ministerial is great for Indian industry as it seeks to lower trade barriers and speed up the passage of goods through customs. Transaction costs are expected to come down significantly through e-transactions and countries will reportedly get funding support for implementing electronic data interfaces.
Source:- asianage.com
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