Mubarak Zeb Khan
Pakistan will oppose an Indian move to get legal cover for subsidy on rice exports to the world market in the next WTO ministerial conference.
The WTO conference is scheduled to be held in the first week of December 2013 in Bali, Indonesia.
A source in the commerce ministry told Dawn that India is lobbying for getting legal shelter for subsidy on rice exports, a move which is likely to affect Pakistan&’s rice exports. WTO allows required stockpiling for ensuring food security, but discourages its misuse.
Senior officials from 159 members of the WTO will attend the event to revive stalled talks on Doha Development Agenda, a source told Dawn.
Pakistan is in the middle ground with China and Indonesia, which are in favour of enlarging the green box subsidies non prohibited subsidies but no exemption to trade distorting support like the one India is lobbying for.
The source further said Islamabad is left with no option, but to play a pro-active role in seeking support from other rice producing countries like Thailand and Vietnam to block Indian move of having a peace clause to shield its subsidies for rice.
India is providing these subsidies through administered prices; these prices are announced before the sowing season and provide an incentive to producers to grow more.
G-33 proposal led by India is demanding exemption from domestic support (aggregate measurement of support) on this assumption that it is minimally trade distorting and it is linked with food security of the country.
The objective of stock holding programmes is to ensure food security of your own population.
India has recently passed an ordinance on food security which is nothing short of a government takeover of the two major commodities, ie wheat and rice.
All developing countries can provide 10 per cent of their total value of agriculture production as non-product specific subsidy and can also provide 10 per cent of the value of production of a specific product as subsidy.
Among BRIC countries, China and Brazil have established a positive forward looking approach by submitting up-to-date regular notifications to the committee. This transparency requirement helps understand the policy of all the developing countries which have money to spend. India&’s performance on this front has been abysmal.
As a result of trade distorting subsidies in India, Pakistan has already lost its market share in rice exports to India in the last couple of years owing to subsidised Indian exports to the world market.
Pakistan lost its position because of aggressive exports from the stocks maintained by Food Corporation of India, a state-owned organisation.
Pakistan&’s rice exports not only stagnated around $2 billion in the last few years but also witnessed a downturn. However, India took over as number one position in exports by releasing stocks which are highly subsidised.
For India, it is an issue of election victory while for millions of rice and wheat growers of smaller developing countries, including Pakistan, it is a matter of livelihood and survival. Gone are the days when Indian farmers were facing these issues.
Pakistan government came out of rice export business two decades ago and rice exports have become a steady source of foreign exchange for the country and the whole business is conducted by the private sector.
Islamabad should uphold WTO disciplines to protect Pakistan&’s rice exports worth $2 billion and invest in research, pest eradication, storage, improvement in yield and develop varieties which consume less water.
The existing level of market price support (MPS) to rice in India is $7bn. Indian government will be going to the Bali conference for exemption of subsidies which are disciplined under the agreement on agriculture.
It is a reflection of Indian policy of protectionism which is resulting in high applied (31.8 per cent) and bound tariffs (113.1 per cent).
Indian Prices Commission&’s report released in March 2013 has criticised Indian policy of high tariffs on agriculture products.
“This defies any economic rationality that world&’s biggest exporter of rice has an import duty of 70-80 per cent, which in fact are totally unnecessary. It will be only in the fitness of trade realities that these import duties are slashed to 5-10 per cent.
“India is a new emerging global power in the world and such an irresponsible behaviour is an indication that now WTO Committee on Agriculture probably needs to focus on Indian subsidies instead of US and EU subsidies.
“There has been a lot of pressure on developed countries for reform of trade distorting support, especially export subsidies due to its negative effect on developing countries farmers.
This constant monitoring has resulted in minimising this expenditure while EU and the US have policy space to provide export subsidies, but US does not provide any export subsidy. However, export credits are still provided with longer repayment periods.
EU has reduced its export subsidies expenditure on dairy and there is almost none to cereals.
However, new emerging developing countries are flexing muscles and are asking for policy space to ensure food security through production and trade distorting support.
This G-33 demand for shielding subsidies which is mainly led by India is an indication of the fact that developing countries may end up hurting each other because of higher level of subsidies shielded in the name of food security.