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TWN Info Service
on WTO and Trade Issues (Jun26/02) Geneva, 3 Jun (D. Ravi Kanth) -- The United States dramatically escalated international pressure on India's domestic agricultural policies - specifically its public stockholding and price support programs - during a meeting of the World Trade Organization's Committee on Agriculture (CoA) on 27-28 May, according to participants familiar with the development. Washington appears to be toying with the idea of initiating a formal trade dispute against New Delhi over the issue of rice. Even as the US and India are poised to sign a major bilateral free trade agreement, the US - along with several members of the Cairns Group of farm-exporting countries, including Pakistan - launched what appeared to be a highly coordinated attack on the rice issue. Washington further organized a private event hosted by its rice lobby on the sidelines of the CoA meeting, said participants who asked not to be quoted. India rejected the claims, yet New Delhi appeared to be isolated. Several members of the G33 coalition of developing countries, such as Indonesia, the Philippines and China, remained silent during the meeting, said participants who asked not to be identified. India has yet to provide its replies to a range of questions raised by the US and its allies on several issues on the WTO's website, including export restrictions on wheat and sugar, the issue of state bonuses, and the reported breach of the Bali interim "peace clause" adopted at the WTO's ninth ministerial conference in Bali, Indonesia, in December 2013, said participants familiar with the development. An orchestrated campaign? This campaign against India looks like a precursor to a trade dispute, as highlighted by Senator John Boozman, chairman of the US Senate Committee on Agriculture, Nutrition, and Forestry. "American rice and wheat farmers continue to be targeted by India's egregious over-subsidization, and there are countless other examples. This legislation will give us the tools needed to address unfair practices and market manipulation by our trading partners to level the playing field and maintain a competitive advantage in the global marketplace," Senator Boozman said. According to several participants, the US appears to have created a seamless narrative linking governmental concerns with private sector grievances. Washington apparently sought to send a message that it is not only the US government raising "red flags" about India's policies, but that the global private sector is deeply alarmed as well by so-called Indian government subsidies. "Localized attack" For the side event, the US brought speakers from the US Rice Association and, significantly, a representative from Pakistan, to argue that this was not a bilateral issue but a multilateral concern shared by developed nations and developing countries alike, including Paraguay and others. The side event, hosted by the US rice lobby - in which US trade envoy Ambassador Joseph Barloon took part - became the focal point for the most direct and harsh criticisms against India. Speakers from Pakistan and the US Rice Association launched what was described as a "very localized attack on India." Their core argument, according to participants, is that they can compete with anyone, but not with the Indian government subsidies. On the margins of the CoA meeting, the private lobbies claimed that India's extensive government procurement, stockholding, and subsidized distribution programs create an uneven playing field that no private actor can possibly match. India's response Faced with a barrage of criticism, India offered several defensive replies, according to participants familiar with the development. On the issue of market destabilization, India argued that if it were to enter the international market to procure its needs, it would destabilize global prices, said participants who asked not to be quoted. India offered several reasons for its domestic procurement, but critics perceived this as an admission that its interventions are large enough to move world markets, said participants who asked not to be quoted. In response to the counter-notification tabled by the US and its allies that challenged the methodology of India's subsidy calculations on rice and wheat, India raised several procedural objections. India argued that there is no WTO rule mandating the use of a specific currency (e.g., US dollars) for subsidy notifications. Critics, however, viewed India's response as a technical deflection from the substantive issue of the magnitude or quantum of the over-subsidization's size, said participants who asked not to be quoted. Regarding the legal framework for public stockholding, India reiterated that existing WTO rules are sufficient to run such programs. India pointed out that a problem only arises when a member tries to integrate a price support system, at which point certain limits apply. If a country cannot respect those limits, it must take recourse to the "Bali decision" (the 2013 interim "peace clause" protecting developing countries' public stockholding programs from legal challenge), said participants familiar with the development. Crucially, the US and its allies responded that India is not meeting the conditions of the Bali decision - neither the transparency requirements nor the condition that the subsidies not cause trade distortion, said participants who asked not to be quoted. The US appears to have argued that India has abused the temporary protections of the "peace clause", which the US now views as a "mistake." The absence of allies Perhaps the most telling aspect of the CoA meeting was the apparent lack of support for India from other developing countries, many of whom are ostensibly members of the G33 coalition. On the counter-notification tabled by the US and its allies, the only country that even mildly questioned the attack against India was Nigeria. Its delegate asked a basic question about whether the data showing India's massive 80% breach was "objective" of the counter-notification, said participants who asked not to be quoted. Notably, key G33 members like Indonesia and the Philippines remained silent, while - somewhat shockingly - Pakistan, also a G33 member, actively joined the US-led attack, said participants familiar with the development. Other major farm-exporting countries, including Australia, New Zealand and Canada, also expressed that they had raised long-standing questions about India's price support system. Canada is understood to have said that India attempted to go on the offensive by questioning Canada about its provincial support schemes, but while they are willing to answer India's questions, India has failed to reciprocate, said participants familiar with the development. For years, Canada has been asking India about its "provincial bonuses" or price support system. According to Canada, India's mysterious and unconvincing response was that "the bonuses announced by the provincial governments are not applicable at the federal level." This response left everyone baffled and further damaged India's credibility on transparency, it claimed. Additionally, India came under criticism for its on-again, off-again export restrictions, including recent decisions on wheat and sugar, said participants familiar with the development. Another major point raised by the US and other countries is that India has become the world's largest notifier of trade-distorting subsidies, estimated at around $60 billion - a claim that is premised on seemingly "flawed" calculations, said participants who asked not to be quoted. US under fire At the CoA meeting, several members sharply challenged the US over its massive new agricultural subsidies, designated under the so-called "One Big, Beautiful Bill." Several countries questioned the US over the billions of dollars of farm subsidies being channelled into the US agricultural sector, said participants who asked not to be quoted. The European Union, China, and the United Kingdom sought to know about "the One Big Beautiful Bill Act (OBBBA)", which was signed into law on 4 July 2025 (Public Law 119-21), as "it injects roughly $65.6 billion in new spending over a decade for farm safety nets while implementing significant cuts to nutrition programs (SNAP).'" The three members alleged that, "in a nutshell, the One Big Beautiful Bill Act (OBBBA) of 2025 will strengthen the farm safety net by increasing commodity reference prices by 10%-20%, enabling a voluntary base acre update, and extending the Dairy Margin Coverage program through 2031." The three members said that "it will improve risk management through higher crop insurance premium subsidies. Given that these measures constitute product-specific Amber Box support, and considering the current upward trend in existing US product-specific outlays, could the United States explain how it intends to accommodate this additional spending within its $19.1 billion Bound Total AMS limit?" In response, the US said "to be clear, the One Big Beautiful Bill Act (OBBBA) does not constitute changes to only product-specific Amber Box support," rejecting "the premise of the European Union's question that all support identified is product-specific in nature." Washington said that it "has not completed any preliminary calculations of the Aggregate Measurement of Support for future years, but can confirm it is currently compiling the necessary data to complete the marketing year 2024/25 domestic support notification. The United States will notify its domestic support for the 2024/25 marketing year at the appropriate time and consistent with WTO rules." The US appears to have maintained that it is "premature" to assess the WTO compliance of these programs, as monies have not yet been fully disbursed, and they are committed to reporting it at the appropriate time and following their WTO obligations. Participants, on a background basis, noted that this defensive posture - reminiscent of ad-hoc COVID-19 relief programs - shows that the US is also vulnerable on domestic support. In a similar vein, Indonesia was also quizzed about its own price support and stockholding systems, indicating that India is not the only country under scrutiny, but that it is certainly the primary target. EUDR face-off During the meeting, several members sharply questioned the European Union's Deforestation Regulation (EUDR) initiative, which is to take effect in December. Brazil, the US, New Zealand, and Australia among others raised concerns about the EUDR, as it is premised on non-discrimination. Moreover, critics argued that the EU has created a "soft landing" for its own producers by classifying all EU member states as "low risk," thereby exempting them from the most onerous certification requirements. Brazil, Paraguay, the US and China questioned the EU on its deforestation and forest degradation strategy on grounds that it appears "to afford more favourable treatment in the EU market to products originating from EU producers, who are often also SME operators, as compared to imports originating from third countries." They alleged that the strategy "appears to result from the fact that all EU member states are classified as low-risk under the EUDR benchmarking system and from the fact that only EU operators seem able to place products directly on the EU market ("or products that this operator itself has grown, harvested, etc.")." In response, the EU replied: "The simplification agreed by co-legislators in December 2025 apply to "micro and small primary operators" (MSPO) irrespective of whether they are established in the EU or in third countries. This obligation will start applying as of 30 June 2027 - unless MSPO place on the market wood products already regulated under the EU Timber Regulation, in which case the obligations will start applying on 30 December 2026." The EU further clarified: * Micro or small primary operators qualify for simplified treatment under the EUDR if they meet four criteria: (1) they qualify as a micro or small operator, (2) they are established in a country classified as low risk, (3) they place the good directly on the market, and (4) they produce the goods that they place directly on the market in the country where they are established. If these conditions are met, the micro or small primary operators have the possibility to submit a one-off declaration instead of a regular submission of due diligence statements. * The simplification agreed in December 2025 is already applicable to "smallholders" or "small scale producers" from third countries as long as such producers meet the four cumulative conditions to qualify as micro or small primary operators. * The changes agreed by the co-legislators in December 2025 do not alter the fundamental nature of the Regulation, which is designed to apply in an even-handed, and non-discriminatory manner to all relevant products, whether produced within or outside the EU. In particular, the simplifications apply to micro and small primary operators from low-risk countries placing their products directly on the EU market, irrespective of whether they are established in the EU or in third countries. * There is no distinction in compliance obligations, due diligence requirements or administrative procedures between EU and non-EU based operators that would derive from the EUDR amendments. * The Commission has developed the definition of micro and small primary operators in line with our international obligations under the WTO. This simplified regime is origin neutral as it treats evenly products from countries that have the same circumstances. This simplified regime is also in line with the objectives of the EUDR because it provides for a one-off registration which contains relevant data to guarantee the enforcement of obligations. In contrast, exporting countries will face much stricter and more costly burdens to prove their products are deforestation-free. This was framed as a potential violation of WTO non-discrimination principles. +
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