‘Peace clause’ at India’s rescue during COVID-19 pandemic?

The author in this post has illustrated the application of the "peace clause" under the Word Trade Organisation's Agreement on Agriculture in the trying times of CoVID-19 due to which the States have been forced to stock staple food for the benefit of the common people to make necessities available to them in the near future.

In trade context, ‘food security’ under the garb of agriculture has been the most disputed issue in the negotiations that have been underway to date at the World Trade Organization (hereinafter referred to as WTO). Agriculture has always been a contentious issue since in the developing world it has grave repercussions on farmer’s livelihood and food security.

With regard to Indian agricultural policies, it has been a trend to maintain low food prices for consumers, extend domestic support to farmers and confer subsidies so as to boost production. In furtherance to this policy, the Indian government procures at MSP (Minimum Support Price), later stockpiles and thereafter distributes food at subsidized prices when required through PDS (public distribution system) and other schemes.

The aforementioned agricultural policy of India has proved to be successful, since India that had been a country facing food deficit had now turned into a country with food surplus in spite of its surging population (India’s population reached an all-time high of 1,332.0 million people in March 2019 as compared to 359.0 million people in March 1951)[1]. In spite of the increasing population the food production in India has grown 5 times since then. Globally, India ranks 2nd in production with respect to food and agriculture wherein agricultural exports amount up to $38.5 billion.[2] However, contrastingly, the Global Hunger Index, 2019 report ranks India at 102nd place among 117 world economies. [3] Also, even after being ranked 2nd in production India still ranks very low in terms of agriculture productivity.

In today’s time, when our global community is suffering from COVID-19 pandemic, the aforementioned figures pointing towards India’s surging population, hunger index and food security issues require immediate attention. It is quite apparent that this pandemic has proven to be a catastrophe and is likely to have further tragic effects on the food security of the Indian population, considering the economic slowdown. Therefore, being mindful of this, the Indian government recently on March 30, 2020, notified the WTO’s Committee on Agriculture regarding its domestic support commitments and subsequently invoked the ‘peace clause’.[4]


Prior to elaborating further on the aforesaid notification, it is important to appraise the readers of this article with India’s “domestic support commitments” under the WTO’s Agreement on Agriculture (hereinafter referred to as AOA) and also throw more light upon the peace clause.


The AOA is a significant WTO agreement that came into force on 1st January 1995. It seeks to administer worldwide trade with respect to agriculture. After the conclusion of the Uruguay Round in 1993 (December), the AOA was designed by the WTO so as to decrease the trade distortion and to increase the trade of agricultural produce across various nations and was applicable on WTO member countries.[5] The primary aim was to make effective use of the food surplus and lessen hunger and dumping of food. Alongside this, the aim was also to enable the farmers to more freely access the agricultural markets across the world by reducing tariffs, domestic support and also eradicate export subsidies.[6] The WTO’s AOA consists of 21 articles and 5 annexures. The AOA also consists of a classification system with regard to the minimum support and subsidies that the respective governments can provide to the farmers of their countries. As per the de minimis rules under the AOA, Aggregate Measurement of Support (AMS) cannot exceed 10% of the value of a developing country’s agricultural output, while the limit is 5% for a developed economy[7].


In 2012, the G-33 countries (which currently has 47 members) group led by India had put forth a proposal that WTO should make its rules with regard to domestic support more flexible by providing exemption to them from WTO regime in certain particular cases for instance when the food is being purchased from producers having low-income or are impoverished in resources. This proposal made by the G33 countries did not find any traction. The proposal made by these 47 member nations under the G-33 group went unheard in the 164 member nations WTO. [8] India through its representatives at the WTO has thus made attempts to bring on the table the issues pertaining to the aforesaid minimum support and subsidies criteria during the negotiations. However, all of it has led to only disappointment leading to failure in defending India’s interests. India along with other developing nations have time and again raised demands that food procurement/public stockholding for food security purposes should not come under the purview of capping framework. However, no such concerns have been addressed so far disregarding the principles of social justice.


In December, 2013 during the Bali conference the ‘Peace clause’ was agreed upon. The ‘Peace clause’ provided temporary protection to the developing countries from breaching the subsidy limits for food security programs until a permanent solution was negotiated in relation to food security.[9] Later, Mr. Suresh Prabhu who was India’s (Commerce and Industry Minister) representative at the Buenos Aires ministerial, 2017 again raised the issue of subsidy limits for the food security programs in December 2017. He requested to work out a permanent solution with respect to the same. However, his attempt failed and instead India was accused of breaching its subsidy limits.[10]

However, the ‘peace clause’ was agreed upon in 2013 at the Bali ministerial conference. The aforesaid clause had its own limitations which required the developing nations to comply with the transparency and safeguard provision and are overall limited in its scope.[11] For example, it only covers traditional staple crops that too under those programs that existed in the year 2013.

Irrespective of its limited scope the ‘peace clause’ has now proven to be beneficial for developing nations particularly India. The Food Corporation of India (FCI) currently has food stocks of fifty-eight million tonnes. This food stockholding will possibly enable India to confront all food shortages that might arise in the nearer future due to the COVID-19 pandemic[12]. It has been established in the aforesaid discussion that India has been time and again accused of trade distortion because of its public stockholding programs. However, on the contrary, all the nations who have raised such allegations against India have failed to realize how these food stockholdings at the end are likely to help developing nations like India to combat food shortages that arise, if any, during the current pandemic. Even though these programs ensure the food security of millions of impoverished people, even then these are questioned and no permanent solution has been yet achieved at WTO.

In the notification of March 30, 2020 to the WTO Committee on Agriculture, India invoked the ‘peace clause’. In the said notification India has pointed out that it has exceeded the ‘de minimis’ criteria/limit of 10% for its traditional staple food crop, rice during the marketing year 2018-2019. India pointed out that its support to rice amounted to 11.46% and is in consonance with the Bali Ministerial Decision on Public Stockholding for Food Security Purposes (WT/MIN (13)/38) and the General Council Decision. Further, India also pointed out that its public stockholding programs are primarily to facilitate the purpose of food security, by meeting the needs of the poor and vulnerable Indian population and not otherwise for commercial trade purposes or for food security of others.[13] India further notified the WTO Committee on Agriculture through notification G/AG/N/IND/19, the list of its schemes which cover the support measure in relation to its earlier submission dated 30th March, 2020 which included, Pradhan Mantri Fasal Bima Yojana (PMFBY), Pradhan Mantri Krishi Sinchayee Yojana (PMKSY)-Per Drop More Crop (PDMC), Rashtriya Krishi Vikas Yojana (RKVY) to name out a few, out of the total 11 schemes.[14]

In conclusion, the most important fact that developing nations should realize is that if they wish to protect their combined interest at WTO with respect to their respective food security policies they need to unite and develop strong relations, only then can they can be entitled to a positive outcome evading shrewd strategies of developed countries aimed against them. They need to arrive at a permanent solution in place of the ‘peace clause’ to protect their nations against any legal challenges. Other developing countries that have similar food security programs should also come forward and invoke the ‘peace clause’.


References:

[1] CEIC, ‘India Population’ <https://www.ceicdata.com/en/indicator/india/population > accessed 6 April 2020. [2] India: An agricultural powerhouse of the world’ (Business Standard, 18 May 2016) <https://www.business- standard.com/article/b2b-connect/india-an-agricultural-powerhouse-of-the-world-116051800253_1.html> accessed 6 April 2020. [3] PHD Research Bureau, ‘India ranks at 102nd place in Global Hunger Index 2019’ (PHD Chamber of Commerce and Industry) <https://www.phdcci.in/wp-content/uploads/2019/10/India-ranks-at-102nd-place-in-Global-Hunger-Index- 2019.pdf> accessed 6 April 2020. [4]Agriculture Information Management System, ‘Notification G/AG/N/IND/18’ <https://docs.wto.org/dol2fe/Pages/FE_Search/FE_S_S009-DP.aspx?language=E&CatalogueIdList=262722&CurrentCatalogueIdIndex=0&FullTextHash=&HasEnglishRecord=True&HasFrenchRecord=False&HasSpanishRecord=False > accessed 7 April 2020. [5]Agreement on Agriculture, ‘Introduction’ <https://www.wto.org/english/tratop_e/agric_e/ag_intro01_intro_e.htm> accessed 7 April 2020. [6] Ibid [7] Chad E. Hart and John C. Beghin , Rethinking Agricultural Domestic Support under the World Trade Organization, Agricultural Trade Reform and the Doha Development Agenda WORLD BANK <http://documents.worldbank.org/curated/en/202871468318342109/841401968_200510313024626/addi tional/34206.pdf> accessed 7 April 2020 [8] Latha Jishnu, ‘WTO's assault on India’ (Down to Earth) <https://www.downtoearth.org.in/news/agriculture/wto- s-assault-on-india-67667> accessed 7 April 2020. [9] ibid [10] ibid (n8) [11] Public Stockholding For Food Security Purposes 27 November 2014 (WT/MIN (13)/38) [12] Sachin Kumar Sharma, Adeet Dobhal, ‘India's food security discussed at WTO amidst Covid-19 pandemic’ (BusinessLine) <https://www.thehindubusinessline.com/economy/agri-business/amidst-the-covid-19-pandemic-indias-food-security-at-wto/article31234049.ece > accessed 7 April 2020. [13] ibid (n4) [14] Agriculture Information Management System, ‘Notification G/AG/N/IND/19’ < https://docs.wto.org/dol2fe/Pages/FE_Search/FE_S_S009-DP.aspx?language=E&CatalogueIdList=262725&CurrentCatalogueIdIndex=0&FullTextHash=&HasEnglishRecord=True&HasFrenchRecord=False&HasSpanishRecord=False# > accessed 7 April 2020.

Submitted by

Nishtha Kohli,

Jindal Global Law School (Images used for representative purpose only)

© 2019 by AmicusX