The peace clause protects a developing country’s food procurement programmes against action from WTO members in case subsidy ceilings are breached. High subsidies are seen to be distorting global trade.
The EU has asked India for all the information on the products covered by the public stockholding programme to assure that only rice support exceeded the limits. It also sought information on support for rice in previous regular notifications.
In a first for any country, India invoked the peace clause for breaching the subsidy limit for rice for marketing year 2018-19. It informed the WTO in April that the value of its rice production was $43.67 billion in 2018-19 and that it gave subsidies worth $5 billion.
The limit is pegged at 10% of the value of food production (called de minimis) in the case of India and other developing countries.
“As many as 25 questions in relation to India’s additional notification obligations, reporting methodologies and the trade impact of the support were raised,” said a Geneva-based official.
At a meeting of the Committee on Agriculture on Wednesday, New Delhi told the WTO that the main objectives of the food security programmes are to ensure minimum support prices for farmers, stability in food grain prices and their equitable distribution at affordable rates to the marginalised and vulnerable sections of society throughout the year.
The adequate buffer stock of food grains helps deal with fluctuations in production and meet unforeseen exigencies and natural calamities.
It also said that marketing year 2018-19 was the only year that it exceeded the de minimis support for rice, which is why it didn’t notify the public stockholding programme for rice prior to that period. India’s public stockholding programmes cover rice, wheat, coarse grains and pulses.
As per the official, India also said that the 850,000 tonnes of rice stocks subsequently sold in the domestic market were not allowed for export, preventing the risk of distorting global markets.
India now has to hold consultations with other WTO members in line with the Bali ministerial decision of 2013 on public stockholding for food security purposes.