Crunch time at WTO: On farm subsidies

India faces a tough challenge on farm issues at the Buenos Aires ministerial meet

December 10, 2017 10:20 pm | Updated December 12, 2017 12:33 am IST

As leaders at the World Trade Organisation’s 11th biennial Ministerial Conference in Buenos Aires seek to define the future contours of multilateral global trade, the challenges the U.S. has mounted on the institution are impossible to ignore. Notable among the proposals trade ministers will consider are those relating to new rules on farm subsidies, the elimination of support for unsustainable fisheries, and the regulation of e-commerce. With the backing of more than 100 countries, a joint proposal from India and China to eliminate the most trade-distorting farm subsidies worth $160 billion in several industrialised economies is arguably the most contentious agenda item at the Ministerial. The two countries see this as a prerequisite to address the prevailing imbalance in the Agreement on Agriculture, which unfairly benefits developed countries. But host Argentina has cautioned that the joint proposal could potentially unravel negotiations. Lending credence to such scepticism is the lukewarm stance the U.S. has adopted towards the WTO over the past year, suggesting that the Ministerial meet should serve as a forum for reflection rather than to shape substantive agreements. The other major dispute centres on finding a so-called permanent solution to the large subsidies that underpin public stock-holding programmes to bolster food security in the developing world. The G-33 coalition — which includes Indonesia, China and India — seeks a complete exemption from commitments to reduce subsidies, such as minimum support prices, from this poverty-alleviation programme. New Delhi has declined to negotiate any more trade-offs on this proposal at Buenos Aires, or accept calls for stringent transparency requirements to monitor these schemes. The EU and Brazil have expressed broad support for the G-33 coalition’s position on public stock-holding programmes. But in return they seek agreement on their own proposal to reduce trade-distorting subsidies on a percentage basis, in both advanced and developing economies.

The existential crisis facing the WTO is heightened by U.S. President Donald Trump’s combative approach to the multilateral institutional framework. Washington has been exploring an alternative, unilateral route away from the formal dispute resolution mechanism of the Geneva-based body to settle perceived and real trade conflicts with partners. It has blocked fresh appointments to fill vacancies on the seven-member WTO appellate body. The risk of Mr. Trump’s protectionist rhetoric translating into economic barriers remains real. The response to that challenge is to make the gains of globalisation more visible and its transient downsides politically less painful. Trade leaders gathered in Buenos Aires can ill-afford to lose sight of this imperative.

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