Answer:

Agriculture occupies crucial space at the WTO negotiations and the issue of subsidies therein is a bone of contention between the developing countries such as India and developed countries such as the United States and those from Europe. The Agreement on Agriculture has been criticised for reducing tariff protections for small farmers in developing countries while simultaneously allowing rich countries to continue subsidizing agriculture at home.

The concern of developing countries regarding the attitude of the developed countries can be summed up thus:

♤ Whereas the developed countries want subsidies to be removed, the developing countries view agricultural subsidies as crucial for their farm livelihood and food security.

♤ The box-shifting practices and use of green box as well as amber box subsidies by rich countries such as US cause concern in developing countries. For example under a 2006 ministerial agreement, agriculture subsidies in rich countries were to be eliminated by 2013 to spur export competition in global agriculture, but this did not happen. In fact, new policies, such as the US Farm Bill of 2014 have ensured that there will be no cut in their export subsidies.

♤ The insistence of countries such as US for Countries like India to limit Amber box subsides to 1986 production (not adjusted to inflation) is a major bone of contention.

♤ While developed countries including the US, Australia, the EU oppose public stock-

holding of food crops, it is crucial for India’s food security programme.

♤ The developing countries are concerned about the issue of import surges and tariffs to be imposed in case of livelihood threatening. This is perhaps most visible in the differences over the structure of the Special Safeguard Mechanism (SSM).

Special Safeguard Mechanism (SSM) is a trade remedy that allows developing countries to impose additional safeguard duties in the event of an abnormal surge in imports or the entry of unusually cheap imports.

India argued for higher level of tariff and lower import surge for making the SSM. On the other hand, the US and allies argued for lower tariffs and higher imports. India and the G33 insist that the SSM mechanism can come into play if imports rise by about 10%, while developed countries want it as 40%.

For a permanent solution, India had proposed either amending the formula to calculate the food subsidy cap of 10 per cent, which is based on the reference price of 1986-88, or allowing such schemes outside the purview of subsidy caps of the AOA. This would enable India to continue with its policy of public stockholding for food security without violating any of the extant provisions.

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