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WhyisIndianotagreeingtotheWTOtradefacilitationagreement

IndiahasmadeitsstanceclearthatitwillnoteasilygiveintopressurefromtheWesternworld
overtradeprotocolsoftheWorldTradeOrganisation,aswasalsodiscussedduringthetalksin
BaliinDecember2013.Indiafearsthatagreeingtothetradefacilitationagreement(TFA)could
compromiseitsownfoodsecurity.
WhatistheTFA?
TheTFAaimstofasttrackanymovementofgoodsamongcountriesbycuttingdown
bureaucraticobligations.TheproblemwithTFArunsinaclausethatsaysfarmsubsidiescannot
bemorethan10percentofthevalueofagriculturalproduction.Ifthecapisbreached,other
memberscanchallengeitandalsogoontoimposetradesanctionsonthecountry.
Thedevelopingcountrieswouldhaveaproblemwiththesolutionsofferedbythedeveloped
countriesaswithoutthesubsidiesthefoodsecurityofthedevelopingnationscouldbeseriously
harmed.IndiaagreedtotheTFAinBalionlyundertheconditionthatinterimreliefwouldbe
providedtothedevelopingnations.Itsaidnolegalactionsorsanctionswouldbeimposedon
thedevelopingnationstill2017,bywhichtimeasolutionwouldbeworkedoutamongthe
nations.However,thisinterimreliefwouldnotbeapplicableifsuchsubsidieswouldleadto
tradedistortions,bywhichonemeans,thatpricesofexportsandimportscannotbeaffectedby
this.
WhyisIndiaopposedtoTFA?
India'sFoodSecurityAct,whichisbindingonthegovernmentbylawnow,impliesthatthe
governmentwillprovideverycheapfoodtothemostvulnerablepartofthepopulationat
extremelylowprices.Apartfromprovidingsubsidiestotheconsumers,throughthepublic
distributionsystem,italsoprovidessubsidiestotheproducersoffoodgrains.Soitbuysfood
grainsfromfarmersataminimumsupportprice,andsubsidisesinputslikeelectricityand
fertiliser.
Thefirstproblemiswiththe10%caponsubsidieswhichwillnotbepossibleforIndiato
achieve.Addingtothewoesisthefactthatthe10%capiscalculatedbasedon198688prices
whenthepricesoffoodgrainsweremuchlower.Sothecaphastobeupdatedtakinginto
accountthepresentpricesoffoodgrains.
Thesecondproblemisthatevenforprovidingsubsidisedfood,Indiawillhavetoopenupits
ownstockpilingtointernationalmonitoring.Itwillnotbeabletoaddproteinheavygrainslike
say,lentils,ifitwantsto,duetoridersinthepeaceclause.
Third,itmightseemunfairtodevelopingcountriestonotcrackdownonfarmsubsidiesthatthe
UnitedStatesprovidestoitsfarmerstothetuneofmorethan$20billionperyear.Whilethe

WTOisbindingthedevelopingcountriestoprotocols,theissueofsubsidiesbydeveloped
giantslikeUSseemstobeoffthetable.
WhatdoesIndiawant?
Indianowwantsapermanentsolutiontotheissueofpublicstockholdingoffoodgrains.G33
membersincludingChinahavesupportedIndia'sstandontheabilitytosubsidiseagricultural
productionanddistributeittothepooratlowcost.
WhydoesWTOhaveaproblemwithhighsubsidies?
WTOarguesthatifthedevelopingcountriescontinuetogivepricestofarmerswhicharehigher
thanthemarketprices,itmightharmthepoorfarmersinotherpartsoftheworld.Italsosays
thedealcouldadd$1trilliontoglobalgrossdomesticproductand21millionjobs,bycutting
downredtapes.Alsoaccordingtomediareports,thedevelopedworldwantstheissueoffood
securitytobedelinkedfromtheTFA,andcouldbediscussedlater.