India is resisting the move as it will halve limits on food subsidies, force dependence on U.S. imports

The crisis at the World Trade Organisation (WTO) talks in Geneva has deepened with the United States demanding India and China be categorised as ‘emerging’ rather than as ‘developing economies’. India is resisting the move which, if it materialises, will halve WTO caps applicable to India’s food subsidies. It will also require India to grant market access to the U.S. The U.S. is insisting that India meet its food security law obligations with American imports, Commerce Ministry sources told The Hindu.

“The U.S. insists that economies such as India and Indonesia with high rates of growth can no longer be categorised as developing countries,” the sources said. “India’s stand is that going by per capita income it is actually the world’s largest Least Developed Country where about 600 million live at less than $2 a day,” the sources said.

The U.S. has also tabled a study in Geneva, produced by its allies Pakistan and Canada, that claims food subsidies in India and China exceed those in the U.S. and the EU, sources said. India has countered the study, the sources added, with data to show that the U.S. farm subsidies to its corporate sector are to the tune of $20,000 to $30,000 per capita per year against India’s mere $200.

Besides, India’s subsidies go to subsistence farmers, said the sources, “To say that the subsidies that India and China give are greater than what the U.S. gives is over the top.”

At the Geneva talks, the U.S. has so far successfully thwarted India’s efforts aimed at finding a permanent protection against even the WTO’s agriculture caps currently applicable to its food subsidies. America’s own agenda of an agreement on Trade Facilitation, however, is well on track for the July 31 deadline as laid down at the Bali Ministerial.

“The U.S. is seeking to muddy the waters on the issue of subsidies in order to cause delays as it is in no position to give a commitment on the issue. The U.S. is engaged in its own domestic political arithmetic over the rejig of its Farm Bill and subsidies, it is not in a position to negotiate on the matter in Geneva,” the source said.

Emerging economy categorisation at the WTO will lower the agriculture subsidy caps applicable to India from 10 per cent to 5 per cent

“The developing countries have managed a complete vilification by indulging in half truths; India needs to put forth its points more forcefully at Geneva,” said Biswajit Dhar, Professor of Economics at Jawaharlal Nehru University.

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