The United States of America has questioned India’s “skyrocketing” rice exports in 2021 and accused it at the WTO of using the ‘Bali interim peace clause’ for overshooting subsidy limits.
- It accused India that was overshooting subsidy limits without meeting the requirement of separately notifying its public stock holding (PSH) programmes.
- Recently, India assured WTO members, that its rice export, pegged at 21.4 million tonnes in 2021, were not sourced from its rice stocks for public stock holding programmes procured at the MSP (minimum support price).
India crossed 10% limit
- India had informed the WTO in early 2020 that it had breached the subsidy limit fixed at 10 per cent of the value of food production for developing countries (under the Agreement on Agriculture) for rice in 2018-19.
- To stop other members from taking legal action against the breach, India invoked the ‘peace clause’ agreed to at the WTO’s Bali Ministerial meeting in December 2013.
Public stockholding programmes (PSH Programme)
- The WTO Agreement on Agriculture (AoA) explicitly recognises the need to take account of food security — both in the commitments that WTO members have made to date, which are monitored in the Committee on Agriculture, and in ongoing negotiations.
- Public stockholding programmes are used by some countries to purchase, stockpile and distribute food to people in need.
- While food security is a legitimate policy objective, some stockholding programmes are considered to distort trade when they involve purchases from farmers at prices fixed by the governments, known as “supported” or “administered” prices.
Bali interim peace clause
- At the 2013 Bali Ministerial Conference, ministers agreed that, on an interim basis, public stockholding programmes in developing countries would not be challenged legally even if a country’s agreed limits for trade-distorting domestic support were breached.
- They also agreed to negotiate a permanent solution to this issue. For most developing countries, the resulting amount has to be within 10% of the value of production (the “de minimis“ level).
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