For a deal in Bali, India wants permissible levels of MSPs updated

"We are keen that the Bali summit should not fail as it is seen as the last chance to revive the WTO’s Doha Round"

India’s preferred position for a deal at the World Trade Organisation Ministerial during December 3 to December 6 in Bali is that the permissible levels of minimum support prices (MSPs) be either updated or reinterpreted.

Indian negotiators are arguing that a major factor for the sharp rise in MSPs is the recent spurt in global food price inflation while the existing caps and formulas are calibrated to food prices in the 1980s. “We are arguing either use a more recent base year for arriving at the caps or use an appropriate deflator for removing the impact of inflation on our administered support prices,” said a key negotiator.

This is a permanent solution to the problem of India’s MSP falling foul with WTO rules. It forms the G33 proposal of the developing countries on agriculture that India is leading. The developed nations are fiercely opposing it and have not allowed it in to the draft for Bali. The draft contains their long-standing offer of an interim peace clause.

Indian negotiators told The Hindu that the draft for the Ninth Ministerial in Bali proposes a working programme after the conference for thrashing out a permanent solution to the issue of permissible subsidies.

The peace clause is proposed be kept in place till the 11th Ministerial. These conferences are held every two years. This clause is conditional on additional transparency on public stock holdings of food. “If India goes with the peace clause, we will have to make additional notifications,” the officials said. The proposed condition on better targeting of beneficiaries is proposed to be dropped.

“While India has not had its preferred way on the agricultural clause, we are keen that the Bali summit should not fail as it is seen as the last chance to revive the WTO’s Doha Round, launched in 2001 in Qatar,” the officials said. Since WTO’s rules require proposals to be passed unanimously a single country can veto a deal in Bali.

WTO Director General Roberto Azevedo had extended the deadline, originally set for November 12, putting together a Bali package in a “last ditch” effort to rescue the talks after the two opposing sides—the G33 led by India and the developed countries—dug their heels in on their respective positions.

Commerce Minister Anand Sharma last week wrote to U.S. Trade Representative Michael Forman, saying: “Food security is crucial for large developing countries like India with hundreds of millions of people subsisting below the poverty line.”

The WTO’s General Council, its highest decision-making body outside of ministerials, will meet on November 21, when it will become clear if the negotiators in Geneva will have a package to report back to their ministers.

Farmer groups had written to Prime Minister Manmohan Singh, asking him to reject any proposal from the U.S. and the European Union that would impact agricultural subsidies and affect over 60 crore Indian farmers. Since it came to office in 2004, the UPA government had doubled the administered MSP for both wheat and rice. Further, since the food security law enacted by Parliament in September would lead to a significant increase India’s domestic support through the increased procurement of food grains, the officials said.