India seeks change in food subsidy cap at WTO.

NEW DELHI: The proposed food security law may attract penal action at the World Trade Organization for a possible breach of the subsidy cap allowed under these rules, prompting the government to seek an amendment to the norms.

Although a proposal from the G-33, spearheaded by Indonesia, China, Pakistan, the Philippines and India, had already been moved in the run-up to the ministerial meeting in Bali in December, the proposed food security legislation has increased the urgency.

At the heart of the problem is WTO's agreement on agriculture which mandates that procurement from poor farmers be capped at 10% of the value of production. With international prices on the rise, and local price fixed at 1986-88 levels, most developing countries with large populations are now staring at the prospect of breaching the ceiling.

Similarly, food sold through the public distribution system also faces restrictions. In case of India, the prospects appear stronger given that the food security law will increase the procurement requirement and increase the subsidy level.

"The food aid commitment is increasing and welfare of the people is a sovereign function of the government," said an official who did not want to be identified. While the G-33 had suggested that the norms need to be reviewed, developed countries led by the US have opposed the proposal, saying it will reopen a decision taken in 1994. Indian officials, however, said while the WTO wanted subsidy reduction by the rich, it was not meant to hit poor farmers, such as those in India.

"It's not our proposal alone. It represents the views of countries that account for nearly 40% of the world population. It's a problem that all of us will face," said an official.

But there is good news for India as some major players such as the European Union, Norway and Australia have shown flexibility, leaving the US virtually isolated.

India has taken a strong position saying it is unwilling to negotiate another issue on the Bali agenda - trade facilitation - which is being pushed by the developed countries, led by the US.

"During a meeting in Geneva last week, we said that we are willing to show flexibility. We can discuss the issue but the agenda has to be comprehensive," a senior official said.


Source : timesofindia.indiatimes.com