60 WTO NATIONS BACK NEW METHOD ON FOOD SUBSIDIES
SYLLABUS SECTION: GS II (AGRICULTURE)
WHY IN THE NEWS?
Recently, at least 60 countries including India, China, Pakistan, Egypt, Indonesia, and South Africa have proposed a new method to calculate Food subsidies to ensure food security for developing and poor nations.
- The G33, African Group, and the ACP (African, Caribbean, and Pacific) groups have asked for the inclusion of inflation.
- That was too based on recent reference prices instead of an old one based on 1986-88 prices.
- They propose that exports of food grain from public stocks be allowed for international food aid and humanitarian purposes for needy countries.
- To amend the anti-circumvention clause in the Bali Ministerial Declaration of 2013.
- As per the latest proposal, stocks acquired under public stockholding programs for food security purposes “shall not substantially distort trade or adversely affect the food security of other Members
NEW SUGGESTED METHODOLOGY:
- Calculate the subsidies by either accounting for excessive inflation in the External Reference Price (ERP) or calculating the ERP based on the last five years excluding the highest and the lowest entry for that product.
- What is ERP?
- ERP is the average price based on the base years 1986-88 and has not been revise for decades.
- This method fails to take into account the high inflation levels in the developing countries
Domestic support in agriculture: The boxes
· The domestic support included the classification of subsidies are classified according to the colors of traffic lights.
· Nearly all domestic support measures consider distorting production and trade (with some exceptions) to fall into the amber box, which is defined in Article 6 of the Agriculture Agreement as to all domestic supports except those in the blue and green boxes.
· This is the “amber box with conditions” — conditions designed to reduce distortion.
. Any support that would normally be in the amber box, is placed in the blue box if the support also requires farmers to limit production (details set out in Paragraph 5 of Article 6 of the Agriculture Agreement).
· In order to qualify, green box subsidies must not distort trade, or at most cause minimal distortion. They have to provide government-fund (not by charging consumers higher prices) and must not involve price support.
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Source: Economic Times