The Modi government’s first major international crisis is brewing at the WTO talks in Geneva, where even six months after the Bali ministerial conference, the US has not allowed progress on talks to ensure permanent protection to India’s food subsidies from WTO caps. Prime minister Narendra Modi must seek support from BRICS, especially China, during his visit to Brazil in July. India heads the G-33 group of 46 developing nations that is seeking amendments to the WTO Agreement on Agriculture to allow procurement of foodgrains from marginal and subsistence farmers. Grains procured to fight hunger shouldn’t be included under WTO-restricted subsidies.
The commerce secretary said on Wednesday: “At the behest of certain countries, work is progressing for a WTO Agreement on Trade Facilitation to come into force by the July 31 deadline the Bali Ministerial had set, but on the other two aspects—permanent solution for food security and issues raised by the Least Development Countries—work is not moving in the manner India would like.” Following the rollout of the Food Security Act by the UPA government, India’s administered minimum support prices for foodgrain procurement run the risk of breaching the permissible subsidy levels under the WTO’s existing agreement. India is entitled to provide 10 per cent of the total value of production of a basic agricultural product as product-specific price support and 10 per cent of the total value of agricultural production as non-product-specific support. Subsidies and support prices in excess of the cap are seen as trade-distorting, against which other WTO countries can initiate legal action.
The commerce minister will be in Brazil ahead of Modi’s visit to prepare the ground for the talks in what could prove to be a major test for the new government’s negotiating skills. India’s new-found camaraderie with China will also be watched to see if the impact the Modi government has made will help India wade rough waters.