India prepares to counter US charges on farm subsidy

NEW DELHI: The government may challenge the US’ accusation that India is under-reporting its food subsidies at the World Trade Organization (WTO) on grounds of amount of production which is eligible for support and the currency in which the country reports its subsidies.

The WTO Agreement on Agriculture defines subsidies on the total value of agriculture production while the US has challenged India on the basis of support given to individual products, namely wheat and rice. Similarly, the agreement doesn’t state the currency in which countries have to report their subsidy dole-out. The US wants India to report in rupee terms while India submits dollar-denominated numbers to the WTO. The US wants India to report in rupee terms while India submits dollar-denominated numbers to the WTO. The US has identified several areas of potential concern with India’s notification of its market price support for rice and wheat.

These include issues with the quantity of production used in market price support calculations, the exclusion of state-level bonuses from calculations of applied administered prices, exclusion from India’s notifications of information on the total value of production of wheat and rice and issues with currency conversions.

“Their calculations are incorrect and we will counter them on eligible production and currency issues,” said an official aware of the development. Policies which amount to domestic support — both under the product specific and non-product specific categories at less than 10% of the value of production for developing countries — are excluded from any reduction commitments at the WTO.

Earlier this month, India informed the WTO that the outgo on minimum support prices was below the permitted levels for rice, wheat, coarse grains, cotton, pulses, groundnuts, sunflower and mustard seed. The limit for developing countries, including India, is 10% of agricultural production. “The US has talked about individual states giving subsidies.

Where is that written in the agreement? The agreement only talks of support given as a country,” said Biswajit Dhar, professor at the Centre for Economic Studies and Planning in the School of Social Sciences at Jawaharlal Nehru University.

The US said it expects a “robust discussion on how India implements and notifies its policies” at the meeting of the WTO Committee on Agriculture scheduled next month.

“India represents a massive market, and we want greater access for US products, but India must be transparent about their practices.

“For trade to be free and fair, all parties must abide by their WTO commitments,” US secretary of agriculture Sonny Perdue said in an official statement.

[ May 11, 2018]