Answer:

There has been a demand for ‘Development Box’ and ‘Food Security Box’ along with ‘Green Box’ in agreement on agriculture (AoA) in order to cater to the needs of food security, rural development, and poverty reduction in developing countries. The basic aim is to ensure that developing countries have the policy flexibility to support domestic agricultural production and ensure the food security of their population.

With the recent rise in global food prices, many countries have begun giving higher subsidies to farmers to promote agriculture, putting them in danger of breaching the 10 per cent cap under the deminimus levels.

During the 9th ministerial conference held in Bali a ‘peace clause’ was agreed between developed and developing countries. The ‘peace clause’ said that no country would be legally barred from food security programmes even if the subsidy breached the limits specified in the WTO agreement on agriculture. This ‘peace clause’ is expected to be in force for four years until 2017, by which time a permanent solution to the problem will be found.

With reference to this outcome, one can correlate to the provisions of Green Box subsidies allowed under AoA which includes items like decoupled income support, research expenditures, pest control measures, training & extension expenses and promotion expenses and infrastructure expenses. However some of the direct payments are also listed in this category. There is ambiguity in head and expense classification, which makes this subsidy highly contentious as many developed nations misuse the loopholes under this category to support their farmers, USA being at the top with 1/3rd of GDP support.

So we can definitely say that with the Bali statement regarding peace clause, India was at least partially successful in placing the ‘Food Security Box’ and ‘Development Box’ alongside the ‘Green Box’. However India and other developing countries should be cautious of following issues.

♤ Accepting a temporary peace clause should not be amounted to admitting that the subsidy programmes in India and other developing nations violate global trade norms.

♤ If the clause expires before a permanent solution is in place, food security programmes and policies to protect farmers, such as Minimum Support Prices, would come under siege.

♤ The peace clause requires full disclosure of MSPs and annual procurement for food security programmes, which might leave India open to questioning by other countries on domestic matters.

Hence there is a need for permanent solution in this regard to ensure food security programme in developing countries.

The WTO agreement with its complex structure provides enough room for maneuvering subsidies to provide protection to domestic produce under the Green Box subsidies. Level of subsidies is so high in developed countries that level playing filed in agriculture trade is a far cry. To counter adverse effect of such support and subsidies following suggestions are made:

♤ Developing countries should seek clubbing of all kinds of support to agriculture in one category and seek some parity among developed and developing countries.

♤ Other member countries should have the freedom to impose protective tariff linked to differences in domestic support.

♤ In order to counter the adverse impact of GBS in other countries on domestic produce, we need to pay serious attention to infrastructure development, which has been deteriorating for quite some time.