New Delhi: Ending months-long deadlock, the WTO on Thursday approved a framework for implementation of a global pact for easing customs norms after acceding to India’s demand to remove constraints on food stockpiling.
The historic agreement would now need to be ratified by governments of individual member countries, including India, for coming into effect which is expected some time next year.
After years of impasse, this is the first major pact reached by WTO members since the multilateral trade body came into existence in 1995.
The WTO’s General Council, the highest decision making body met in Geneva today and accepted India’s demand for extending the peace clause till a permanent solution is found for its food stockpiling issue.
As per the Bali agreement, the peace clause was to continue till 2017 only.
Today’s extension is crucial for India to meet over Rs 1 lakh crore a year food security programme, which needs 62 million tonnes of foodgrain in a year.
This will enable India to continue procurement and stocking of foodgrain for distribution to poor under its food security programme without attracting any kind of action from WTO members even if it breaches the 10 percent subsidy cap as prescribed by the multilateral trade body.
It was also agreed that a “special session” on agriculture will negotiate the permanent solution and try to arrive at a solution by December 2015, they said.
“After the TFA got ratified by two-third of the members, it will come into effect for those countries,” a source added.
For a permanent solution to the food security issue, India has proposed either amending the formula to calculate the food subsidy cap of 10 percent or allowing such schemes outside the purview of subsidy caps.
India had earlier refused to ratify the TFA in Geneva in late July till demanding that WTO members find a permanent solution to the issue of public stock holding of foodgrains to feed its poor.
On November 13, India and the US resolved their differences over the public stock holding issue at the WTO, paving the way for implementation of the pending TFA to ease customs norms.
The differences on the public stock holding of foodgrains between the developed countries led by the US and developing nations including India had led to an impasse over ratification of the TFA at Geneva in July.
Under the peace clause, a WTO member gets immunity against penalty for breaching the food subsidy cap. As per the WTO norms, a developing nation can provide food subsidy of up to 10 percent of the total farm output.
The TFA is being pushed by the US and other developed world as they seek to bolster their sagging economies through unhindered international trade by way of a uniform and easy procedures at customs.
Commerce and Industry Minister Nirmala Sitharaman is expected to give a statement on the development tomorrow in Parliament.
India had asked WTO to amend the norms for calculating agri subsidies so that the country could continue to procure foodgrains from farmers at minimum support price and sell them to poor at cheaper rates without violating the WTO norms.
The current WTO norms limit the value of food subsidies at 10 percent of the total value of foodgrain production. However, the quantum of subsidy is computed after taking into consideration prices that prevailed two decades ago.
There were apprehensions that once India would fully implement its food security programme it may breach the cap.
India is implementing the Food Security Act which entitles 82 crore people to 5 kgs of foodgrain per person in a month at the rate of Rs 1-3 per kg.