India’s capital New Delhi and its surrounding areas are once again witness to agitating farmers coming in hordes and trying to cross over the borders from neighbouring Haryana, Punjab and Uttar Pradesh, with a list of demands. Their main demand from the Narendra Modi government is to have a guaranteed price for their products by way of domestic support, also known as the minimum support price or MSP. While the MSP policy has always been a subject of much controversy as far as India’s relationship with the World Trade Organization (WTO) is concerned, the previous governments had been able to manage it somehow. But expectations from the Modi government are high because it has not just demonstrated itself as the torchbearer of the so-called Global South but also recently chosen India’s foremost agronomist MS Swaminathan, who was a pioneer in sustainable agriculture and food security, for the Bharat Ratna.
The issue of India providing MSP to its poor and marginal farmers has been a subject of much debate, almost taking the centre-stage, at the Geneva-based WTO for decades. While the matter has haunted all past Indian governments, it has come to rattle the Modi government by way of the recurring farmer protests. In the first term of its rule from 2014 till 2019, the government had resorted to addressing the issue of food security and public stockholding at the WTO. However, in the absence of effective negotiators, the matter continued to haunt India and its farmers, and today New Delhi seems to have no choice but to give in to the demands of the developed countries' lobby spearheaded mainly by the United States and the European Union. The Modi government’s thinking that geopolitics will settle matters related to complex issues of global commerce and international trade has failed to yield any positive results. Inside the WTO, there is a deep division between the developed and developing countries on the issue of food subsidies. In Geneva, India and China are closer on this issue, fighting a steady battle for decades with the US, the EU and others.
Back in 2017, during the annual trade ministerial meeting of the WTO in Buenos Aires, India had fought tooth and nail to push it to grant special treatment to the developing countries in backing their food security plan, thereby preventing any move by the developed countries to reform global trading rules on agriculture under which countries like India will not be able to offer subsidies to its farmers.
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The talks to reform global agriculture rules began in 2000 at the WTO. Subsequently, in 2013, at the WTO ministerial conference in Bali, Indonesia, the multilateral trading body agreed on a historic decision wherein a WTO ‘peace clause’ or interim solution was arrived at, granting relief to those countries who provided support to its farmers. The relief came in the form of not being dragged to the dispute settlement body of the WTO by the richer countries.
At that time, it was decided that a ‘permanent solution’ will be concluded by 2017, and the peace clause will be gradually removed. But due to the US the matter continues to remain stuck and that has frustrated farmers around the world, including India, who are now asking the government to withdraw its membership from the WTO. The US has said that due to this peace clause countries like India have become a leading exporter of rice, which remains a contentious subject at the WTO because on this particular item New Delhi has exceeded the permitted limit of subsidies at the multilateral body, known as the de minimis level.
This is the reason why India cannot give any guarantee on the MSP. If it does, countries like the US, which is otherwise a strategic ally of India and also a partner in geostrategic groupings like the Quad, will not spare New Delhi and blame it for distorting trade. And now that India is pursuing complex free trade agreements with the EU, Australia and others, granting a legal guarantee on MSP will be counterproductive as it will restrict market access for these players.
India has been a member of the WTO since 1995, and since then it has been subjected to asymmetrical trade benefits as far as agriculture and food security are concerned. However, it was only in 2013 that India was able to get some respite at the global trade body. In 2018-19 and in 2019-2020, India’s subsidies came under the scanner of the WTO, or specifically the US, for exceeding the de minimis level. This is because India has failed to give notifications, as per WTO rules, during these years on how much subsidy it gives to its farmers.
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As thousands of farmers are now up in arms against the government’s decision to not legalise the MSP, the Modi government needs to deploy some of its top-notch diplomats in Geneva and not just trade negotiators who can do the math for them. The real job of heavy lifting has to be done by the diplomats. Just as PM Modi personally intervened in the matter of eight Indian sailors who were released and their death penalty in Qatar scrapped, his government needs to come up with an innovative idea to settle this matter once and for all.
The WTO will be holding its 13th trade ministerial round on February 26-29 at Abu Dhabi. The India delegation will be led by Commerce Minister Piyush Goyal. He should also include a few diplomats from the Ministry of External Affairs, who are effective in handling the US and Europe and try to arrive at a diplomatic solution that can later culminate into something concrete. This is India’s opportunity to grab a fruitful deal for itself so that the immediate issue of farmers’ agitation can be tackled like former commerce and industry minister Anand Sharma did when he got for India the ‘peace clause’ by doing rounds and rounds of negotiations with the then US trade representative Michael Froman even as backdoor diplomacy on both sides did its job.
PM Narendra Modi recently concluded a landmark visit to Abu Dhabi, which is going to be the host this year of the WTO event. It seems the issue of farmers, subsidies and WTO came up during the bilateral talks the PM had with UAE officials. With the US now taking several steps that have literally rendered the WTO toothless, India should also analyse whether it is time to ditch the multilateral trade body for the good of farmers.
Farm MSP Issue Entangled With WTO, Modi Govt Needs Its Diplomats In Geneva
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15.02.2024
India’s capital New Delhi and its surrounding areas are once again witness to agitating farmers coming in hordes and trying to cross over the borders from neighbouring Haryana, Punjab and Uttar Pradesh, with a list of demands. Their main demand from the Narendra Modi government is to have a guaranteed price for their products by way of domestic support, also known as the minimum support price or MSP. While the MSP policy has always been a subject of much controversy as far as India’s relationship with the World Trade Organization (WTO) is concerned, the previous governments had been able to manage it somehow. But expectations from the Modi government are high because it has not just demonstrated itself as the torchbearer of the so-called Global South but also recently chosen India’s foremost agronomist MS Swaminathan, who was a pioneer in sustainable agriculture and food security, for the Bharat Ratna.
The issue of India providing MSP to its poor and marginal farmers has been a subject of much debate, almost taking the centre-stage, at the Geneva-based WTO for decades. While the matter has haunted all past Indian governments, it has come to rattle the Modi government by way of the recurring farmer protests. In the first term of its rule from 2014 till 2019, the government had resorted to addressing the issue of food security and public stockholding at the WTO. However, in the absence of effective negotiators, the matter continued to haunt India and its farmers, and today New Delhi seems to have no choice but to give in to the demands of the developed countries' lobby spearheaded mainly by the United States and the........
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