India to take tough stand on food subsidy at WTO Bali meet

Ahead of WTO meet in Bali, India today decided to insist on permanent immunity from actions for breach of subsidy level on rolling out food security plan—a stand that can potentially derail talks next week.

Also read: India not responsible for WTO talks failure: Officials

The Cabinet headed by Prime Minister Manmohan Singh decided to insist on solution to the subsidy breach issue prior to finalisation of Trade Facilitation Agreement even if it means that New Delhi will be blamed for any potential failure in Bali, sources said.

The meeting gave Commerce Minister Anand Sharma a mandate to negotiate India's stand at the Bali WTO ministerial meeting beginning December 3-6.

The Commerce Ministry placed before the Cabinet three options but the bottom line was that India will not compromise on its stand that it should be allowed to provide subsidised food to all poor and offer the minimum support price to farmers even if the 10 percent ceiling on farm subsidy as provided in the WTO is breached, sources said.

The Cabinet decided on the second option which insists for the interim solution (four-year 'peace clause') must remain in place until a permanent solution is reached.

"We are also assured protection from challenge under the WTO agreement on subsidies and countervailing measures," sources said.

This proposal would protect India's food security plan from WTO penalties even if 10 per cent subsidy cap is breached.

Under the peace clause, a WTO member gets immunity against penalty for breaching the food subsidy cap. It would allow also India to procure foodgrains at the MSP and sell it at subsidised rates through the public distribution system.

As per the WTO norms, a developing nation can provide food subsidy of up to 10 per cent of the total farm output  India stance however, is likely to face stiff opposition at WTO, they said.

"In such a situation, considering India's consistent stand on a fair Bali package, it may not be desirable to endorse the TFA. In that case, it is likely that India may be blamed for a failure at Bali," sources said.

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