The recent conclusion of the WTO ministerial assembly in Abu Dhabi, occurring on March 3, 2024, unveiled a predictable outcome to those familiar with the operations of this global trade entity.
The impasse encountered finds its roots entrenched within the very framework of this institution.
Each constituent endeavors to outmaneuver the system. While the WTO is ostensibly designed to arbitrate trade disputes through consensus and dialogue, certain influential member nations, exemplified by the USA, have forged Free Trade Agreements (FTAs) with select allies, effectively circumventing the foundational tenets of the WTO. The genesis of this trend can be traced back to 1993 when the USA introduced the North American Free Trade Agreement (NAFTA), thereby facilitating the exportation of heavily subsidized agricultural produce to Mexico and analogous nations—a practice tantamount to the inundation of American agricultural goods within the region at artificially deflated prices. Emboldened by the strategic maneuvers of the USA, other nations have since initiated analogous FTAs, leading to a proliferation of such agreements since the inception of the WTO. These FTAs afford signatory nations the liberty to incentivize non-compliance with principles of equitable competition, thereby legitimizing a scenario where the powerful prey upon the weak.
Consequently, the WTO has metamorphosed into a semblance of the United Nations. In the span of 28 years since its establishment, the global landscape has regressed to a state reminiscent of the pre-World War II era.
The agricultural sector emerged as the focal point during MC13 (February 26 to March 2, 2024), with both India and Europe grappling with contentious issues such as subsidies and market access, which have ignited fervent protests amongst farmers. Of paramount concern to India and its cohorts, comprising nearly 80 nations, were deliberations pertaining to public stockholding (PSH) aimed at bolstering food security. PSH assumes critical significance for two primary reasons: firstly, it entails the procurement of cereals from farmers, assuring them of Minimum Support Price (MSP) safeguards in instances of market price fluctuations; and secondly, the acquired grains are earmarked for the provision of free rations to over 810 million impoverished citizens through initiatives like the Prime Minister Garib Kalyan Ann Yojana (PMGKAY), while also fulfilling obligations under the National Food Security Act (NFSA), wherein highly subsidized food items are distributed.
The regulatory framework of the WTO imposes constraints on the extent of subsidies that can be extended to procured agricultural commodities. The G-33, a coalition of developing nations inclusive of India and African contingents, representing over 80 nations in total, is advocating for a permanent resolution concerning PSH to fortify food security objectives, whilst urging enhancements to the ministerial decision adopted during the ninth ministerial conference (MC9) in Bali in December 2013. At that juncture, member states had committed to initiating negotiations for a permanent resolution to this quandary by MC11. In the interim, a pact was reached to exercise prudence, colloquially referred to as the “peace clause,” in abstaining from instigating disputes related to PSH implemented before December 7, 2013, even in instances of exceeding permissible thresholds.
India, in the realm of agriculture, is steadfast in its pursuit of a lasting resolution to its PSH program, envisaging uninterrupted procurement of cereals at MSP rates for subsequent distribution through public welfare initiatives. India’s stance prioritizes addressing longstanding grievances, which were established in 2013. Conversely, Brazil and fellow members of the Cairns Group, representing agricultural exporting nations, advocate for a comprehensive deliberation encompassing all agricultural facets. Export-oriented nations, including the US, endeavor to constrain PSH, championed by a coalition of 80 nations, to facilitate market penetration within these territories.
Benefitting from a perpetual peace clause governing PSH, rendering it immune to challenge, India occupies a position of relative ease, absolved from the need for local agricultural policy adjustments. It warrants mention, however, that certain farmer associations in India have voiced calls for withdrawal from the WTO, purportedly to safeguard the interests of farmers and uphold food security for the vast majority of the populace. These assertions betray a lack of comprehension regarding the functioning of the WTO and the ramifications of withdrawal. A cessation from the WTO framework would precipitate dire economic consequences, rendering India bereft of the capacity to competitively export manufactured goods or avail itself of international labor markets—a scenario tantamount to economic calamity on an unprecedented scale.
In pursuit of a lasting resolution, India advocates for measures such as recalibrating the formula used to compute the food subsidy ceiling and revising the external reference prices utilized in calculating market price support within the ambit of public stockholding—metrics currently predicated on outdated 1986-88 benchmarks, resulting in an inflated subsidy tally.
Efforts are underway in Geneva to formalize the Investment Facilitation for Development agreement, garnering support from over 120 nations in Abu Dhabi. India and South Africa, however, successfully impeded this endeavor during MC-13, contending that its purview extends beyond trade-related matters.
In the interim leading up to MC-14 in Cameroon in 2026, India endeavors to introduce non-trade issues such as gender and support for Micro, Small, and Medium Enterprises (MSMEs) onto the WTO agenda. These forthcoming negotiations will underscore India’s resolve to safeguard its interests leveraging its competitive edge and economic prowess.