Face-offs and trade-offs: Defending India’s stance on subsidy at WTO | ht view | Hindustan Times
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Face-offs and trade-offs: Defending India’s stance on subsidy at WTO

ht view Updated: Jul 21, 2014 14:20 IST
Gaurav Choudhury
Gaurav Choudhury
Hindustan Times
World Trade Organisation (WTO)

One man’s fixation with rules can be another man’s lifeline.

Many international trade negotiators argue in favour of shooting down subsidies because it `distorts’ trade. But, the simple fact is that in a more-than-a-billion strong nation, in which nearly one in every three lead a subsistence living, one needs an effective and efficient method through which privileged tax payers can support the poor.

India is willing to take the blame for delaying the World Trade Organisation’s (WTO’s) “trade facilitation agreement” (TFA) rather than hurting the interests of millions of small farmers and impoverished families.

Ahead of the WTO’s two-day General Council Meeting beginning Thursday, India has worked out a hard bargain strategy for drawing up a permanent solution on food subsidies.

India will seek a postponement of the of the TFA -- which seeks to speed up procedures and make trade easier and cheaper across nations — to December 31, 2014 from the earlier July 31 agreed upon during the WTO’s Bali ministerial conference in December last year.

This stance to brazen it out, however, carries the risk of pushing India into corner if the WTO decides to adopt the TFA by a simple majority. Besides, pressure from developed countries could adversely affect bilateral trade.

However, even at the cost of getting isolated, New Delhi has firmly placed food security of the poor at the core of the on-going WTO’s discussions, making it amply clear that it would not be willing to agree on a global trade regime that could potentially hinder the rollout of welfare schemes.

In the absence of a broad-based agreement on the Doha round of trade talks that started in 2001, member-countries are making a fresh attempt to build consensus can be reached for laying down the rules of global trade.

Last year, developed nations have shown support for a “peace clause” that would agree to developing countries’ demands on food security for a period of four years, but India has pressed for hammering out permanent solution as a condition for ratifying the TFA.

India has been pressing the WTO to find a way on allowing developing countries the right to provide higher levels of food subsidies for their poor beyond these four years. India’s stance has faced strong headwinds in Bali with the developed countries, as expected, opposed to a lasting agreement on food security.

One of the primary objectives of subsidised entitlements to poor is to address concerns of equity. Otherwise, there would not have been the need for legislating subsidised meals for the poor who have a right to live with human dignity. India still has a long way to go before it can get food into every mouth that needs it. The Food Security Act, may well mark the beginning of this long journey.

To that extent any subsidy programme is critical, especially for a middle-income country such as India. New Delhi’s strong pitch for the protection of subsistence farmers underscores the fact any multi-lateral system must have a fair and balanced outcome, which addresses the concerns of equity among rich and poor nations.