India’s ‘wheat waiver’ WTO demand is risk ­fraught

India’s ‘wheat waiver’ WTO demand is risk ­fraught

India’s ‘wheat waiver’ WTO demand is risk ­fraught

India’s ‘wheat waiver’ WTO demand is risk ­fraught

• • India’s ‘wheat waiver’ WTO demand is risk ­fraught

• • One of the cardinal demands  of India from WTO(world trade organization) and
• rightly so — has been to find a permanent solution to the issue of public stockholding (PSH) of food to protect India’s food security (PSH policy).
• India’s PSH policy is based on procuring food from farmers at an administered price (minimum support price or MSP), which is generally higher than the market price.
• The PSH policy serves the twin objectives of offering remunerative prices to farmers and providing subsidised food to the underprivileged.
  • However, under WTO law, such price support­based procurement from farmers is counted as a trade  distorting subsidy, and if given beyond the permissible limit,
• breaches WTO law.
• Currently, India has temporary relief due to a ‘peace clause’ which bars countries from bringing legal challenges against price support­based procurement for food security purposes.
• However, a permanent solution to this issue is still not in the offing.
• The WTO ministerial meeting in June at Geneva did precious little to address this issue.
• Paragraph 10 of the declaration on food security  adopted at the Geneva ministerial states: “We recognize that adequate food stocks can contribute to  the realization of Members’ domestic food security objectives and encourage Members with available surplus stocks to release them on international markets consistently with WTO rules”.

As I have argued, prima facie this might show that India’s concerns about the PSH issue have been taken on board. However, for

• • India, the real issue is not about maintaining adequate food stocks, which WTO rules do not prohibit, provided food is stocked by employing non­trade distorting instruments such as providing income support to farmers (cash transfers independent of crop production).
• • India’s concern is that it should have the policy space to hold public food stocks using the MSP, which is a price support instrument. However, there is no mention of price support in the Geneva declaration.

New dimension

• • Conspicuously, in the run­up to the WTO ministerial meeting and, subsequently, India’s demand for a permanent solution to the PSH policy has acquired a new dimension. India insists that it should also be allowed to export food, most notably wheat, from the pool of the foodgrain procured under the MSP. This demand was recently rearticulated by Finance Minister
• • Nirmala Sitharaman at the G20  meeting in Indonesia. The Russia-  Ukraine war has unleashed a food crisis in many countries. India perhaps wishes to capitalise on this   opportunity.
  • However, WTO law proscribes  countries from exporting  foodgrain procured at subsidized prices. There is a sound economic rationale behind it. Allowing a country to export foodgrain procured at subsidised prices would  give that country an unfair advantage in global agricultural trade.
• • The country concerned will sell food grain in the international market at a very low price, which, in turn, might depress the global prices and have an adverse impact  on the agricultural trade of other  countries.
• • Accordingly, paragraph  4 of the 2013 WTO decision on PSH for food security purposes, clearly states that countries procuring food for food­security purposes shall ensure that such procured food does not “distort trade or adversely affect the food security of other Members”.
• • The same spirit is reflected in paragraph 10 of the Geneva ministerial food security declaration, which states that countries may release surplus food stocks in the international market in accordance with WTO law.
  • Debatably, the WTO may agree to a temporary waiver to allow the export of wheat from public stock-holdings given the ongoing food  crisis in some countries.
• • In fact, before the WTO ministerial meeting, India reportedly requested  such a waiver. However, it is very  unlikely that such a request will be  acceded to.
  • The history of waivers at the WTO is fraught with huge let downs. The recently adopted  waiver on intellectual property (IP) for COVID­19 medical products is a case in point. The IP  waiver is restricted to only COVID­19 vaccines and does not cover diagnostics and therapeutics.
• • The shallowness of the IP waiver is  further reinforced by the fact that  it is limited to only patents and does not cover other IP rights.
  • Moreover, as per Article IX.3 of the WTO Agreement, waivers can be adopted only in “exceptional  circumstances”. The WTO filibutered for two years acknowledging  a once­in­a­century pandemic  such as COVID­19 as an “exceptional circumstance” for the IP waiver.

• • Thus, the possibility of it recognizing an ongoing war between two  nations as an “exceptional circumstance” to adopt a waiver for permitting wheat exports from public  stocks is profoundly remote.
  • What the focus should be

• • Developed countries have historically opposed India’s PSH programme as they apprehend that
• • India might divert some of its public stock to the international market, thus depressing global prices.
• • While this argument should be taken with a pinch of salt, India actively pushing for exporting food  from its official granaries gives fresh ammunition to the naysayers to stick to their guns in opposing a
•         permanent solution to the PSH issue. Thus, India should revisit its  stand on asking for a waiver for  wheat exports                 from      its public  stockholding, which, in any case, was not a part of India’s PSH policy.
  • Besides, as reported, the Government’s wheat procurement  has been 57.5% less than the original target for this season. So, if the  public procurement has been so  low, what is the point in asking for a waiver to export wheat from the  public stock?

• • Spending scarce negotiating  capital on this issue might dilute  India’s core agenda of pushing for  a permanent solution for its PSH  programme to attain the goal of  food security and providing remunerative prices to the farmers.
• • The laudable objective of helping countries facing food crises can be accomplished by strengthening India’s commitment to the United Nations World Food Programme. Or, if the domestic situation ameliorates, India can lift the ban imposed on private traders to export wheat.
  • Negotiations at the WTO require crystal clarity of the core objectives that should be relentlessly pursued. Adding newer objectives and shifting goalposts  might result in falling between two stools.