Indian Farmers Call for Rejection of Draft 'Peace Clause' Solution

The article below was published in South-North Development Monitor (SUNS) #7698, 18 November 2013.  We thank SUNS for permission to re-distribute this article.

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Indian farmers call for rejection of draft 'peace clause' solution

Geneva, 15 Nov (Kanaga Raja) -- Expressing alarm over the "take-it-or-leave-it" draft text on an interim solution on the G-33 proposal on public stockholding for food security, a number of farmers' groups in India have called on their government to reject such a 'peace clause'.

In a letter dated 14 November 2013 and addressed to Prime Minister Dr Manmohan Singh, these groups instead demanded a "permanent solution" to protect farmers' livelihoods and access to food.

They further demanded that India "stand up to the might of the US/EU, and reject any proposal that leads to dismantling of the famine-avoidance strategies", adding that India cannot be forced to go back to the days of 'ship-to-mouth' existence.

The groups urged India to pursue the G-33 proposal aggressively as the way forward and "not accept the current proposal which effectively neutralises the Peace Clause with its farcical conditionalities."

The letter was signed by some 15 farmers' associations and unions including Bhartiya Kisan Union, National Fish Workers Forum, Haritha Sena, Karnataka Rajya Ryotha Sangam, Thamizhaga Vivasayigal Sangam, Kerala Coconut Farmers' Association, BJP Kisan Morcha, and Bharti Kisan Union.

[According to the draft 'due restraint' interim solution purportedly put forward by Director-General Roberto Azevedo on Tuesday as a 'take-it-or-leave-it' proposal, the 'peace clause' would have a duration of only fours years, up until the 11th Ministerial Conference.

[Some trade observers have noted that the anti-circumvention/safeguards provision in the draft text is rather vague in meaning, which simply states: "Any developing Member seeking coverage of programs under paragraph 1 shall ensure that stocks procured under such programs do not distort trade."

[They further pointed out that the draft decision would be applicable to a limited number of traditional staple food crops, and contains some rather onerous notification and transparency obligations. Furthermore, the 'peace clause' would not apply to the Subsidies and Countervailing Measures (SCM) Agreement. As a result, those developing countries undertaking public procurement for stockholding as part of their food security strategy, would be put in a position of having to prove that they are not distorting trade.

[According to these trade observers, the only positive element of this draft text appears to be the proposed work programme aimed at finding a permanent solution, which is laid out in paragraph 7: "Members agree to establish a work programme to be undertaken in the Committee on Agriculture to pursue this issue within the context of the on-going agricultural negotiations with the aim of making recommendations for a permanent solution."

[However, the observers note, this has to be weighed against the fact that some similar work programs, launched on other issues at other earlier ministerials, remain still pending completion. Even the Marrakesh Treaty-mandated work programme for harmonising the MFN rules of origin (mandated to be completed by end-1997) remain incomplete, bottled up at the General Council since 2007, with no decision.

[And if this happens to the 'peace clause' on food security, and no permanent solution emerges by the time of the 11th Ministerial Conference, the 'peace clause' would have expired, and most developing countries would at that time remain even more exposed to the inequitable WTO rules.

[According to trade observers, the 'peace clause' would then turn out to have been a ploy for the US to get a Bali package with a binding Trade Facilitation accord. It may or may not result in the WTO regaining credibility before the US as a negotiating forum, but would end up with people in developing countries losing any trust in the WTO, or their governments who agreed to such a 'peace clause'.]

In their letter to the Indian Prime Minister, the farmers' groups said that in the twist of international trade rules, it seems that India may now have to disband the gains of the Green Revolution and revert back to the days of 'ship-to-mouth' existence.

It has come up against WTO rules on agricultural subsidies, which, according to the Agreement on Agriculture (AoA), allows only a 'de minimis' subsidy of 10% of production for most developing countries.

"This subsidy is irrationally calculated on the basis of a fixed reference price of 1986-88 when prices were much lower. This inflates the subsidy and it remains disconnected from the reality of global agricultural prices today. In addition, the whole production eligible to receive such subsidy and not the actual production which is being procured is included in the calculation," said the letter.

The groups believe that in response to this challenge posed by current WTO rules, permanent changes are required in AoA rules to allow such subsidies to be treated as non-trade distorting.

Noting that this has been proposed by the G-33, the letter said that it seems, however, that the developed countries, most notably the US and the EU, have resisted such a proposal and outright rejected most of the specific elements.

"Such resistance is unfair and shocking especially because the US and the EU are openly continuing not only their domestic subsidies but their export subsidies as well. They have not complied with the 20 per cent reduction of AMS [Aggregate Measurement of Support], and they have shifted subsidies to the notorious Green Box to continue and even increase them without limits."

The letter highlighted that the US has more than doubled its subsidy from $61 billion to $130 billion between 1995 and 2010, while the EU's subsidy of 90 billion euro (1995) came down to 75 billion euro in 2002, but rose again to hover between 90-79 billion euro between 2006-2009.

Ironically, according to a study, India will provide 60kg/person of food-grains under the newly enacted Food Security Act while the US provides 385kg/person for food aid under several programmes like the food coupons, child nutrition programmes etc.

In 2010, the US spent $94 billion for its food aid programmes, which in 2012 reached $100 billion. Against this, India's food subsidy bill is expected to be around $20 billion.

"Even this is not tolerable to the US and the EU," said the letter.

So, it added, forty-seven years after the Green Revolution was launched, India is now being virtually asked by the developed countries at the World Trade Organisation (WTO) to dismantle the food procurement system built so assiduously over the past four decades.

"The grave implications of this ill-advised move, is aimed not only at destroying the country's hard-earned food security but also the livelihood security of over 600 million farmers, 80 per cent of them being small and marginal farmers."

Noting that WTO Director-General, Roberto Azevedo, has suggested a final text on the peace/due restraint clause in a "take it or leave it" manner, the farmers' groups however highlighted several problems with the text.

First, they said, this suggests only a four-year Peace Clause which will elapse at the 11th Ministerial and is not linked to a permanent solution.

Second, only a few crops can be supported under this provision.

Third, a large number of conditionalities are being imposed on this Peace Clause "which will make it unusable and meaningless", said the letter to the Indian Prime Minister.

It noted that the Anti-Circumvention/Safeguard clause suggests that the member state using this "shall ensure that stocks procured under such programs do not distort trade".

"This leaves the provision totally porous, subject to interpretation which can be used to challenge the very operation of such stockholding programmes," the letter stressed.

"Knowing the hardening positions, it does not make any sense for India to trade off the very survival of its 600 million farmers and roughly 830 million hungry for the sake of a successful Doha round (Bali package)," the farmer's groups said.

India cannot dilute its position on the G-33 proposal and accept a Peace Clause which makes a travesty of the poverty and hunger faced by millions of Indians every day, they added.

"Nor can India be allowed to mortgage its right to food and the right to livelihoods of the poor and the needy enshrined in the Constitution. Accepting the Peace Clause and the current text suggested by the Director-General therefore would be detrimental to India's interests," the letter underlined.

"India should not trade-off its food security concerns and the livelihood security of millions of farmers against the trade facilitation agreement. The latter is unfair, biased and forwards only a developed country agenda as it stands at the moment," the letter concluded.