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WTO poised to approve TFA, peace clause today
Nov 26, 2014

The World Trade Organization (WTO) might approve both the trade facilitation agreement (TFA) and the food security "peace clause" on Wednesday in its special General Council (GC) meeting.

The meeting at the WTO headquarters in Geneva is likely to retain the implementation of the TFA by the July 2015 deadline. India and other developing countries will, however, be offered a peace clause that will remain in effect till a permanent solution to food stockpiling schemes are sought.

India had vetoed the adoption of the protocol for the TFA, which makes the pact legally binding on all countries. It was expected to be signed on July 31. Hence, it was assumed that since the process was delayed, its implementation might also be delayed.

But the GC might make an announcement that the TFA, which seeks to infuse $1 trillion into the global economy by reducing transaction costs, will be implemented on schedule. At the same time, it will approve necessary changes to the Bali decision so that the peace clause continues until a permanent solution is "agreed and adopted."

However, the stringent conditions required to avail the peace clause would remain "exactly the same," officials told Business Standard.

One of the conditions required to be met by India and other developing countries using the clause is to ensure that food procured by the government under stockholding programmes do not distort trade or adversely affect similar programmes of other countries.

"We do not have legal benchmarks to assess the government procured food will not adversely impact trade, because we do export some amount of grain covered under the programme," said an official.

India's stockholding programmes include staple crops like rice, wheat and cereals. These are procured by the government through a mechanism of minimum support prices.

Another condition India has to adhere to for availing the peace clause is the provision will not be allowed for future food stockpiling programmes and will be subject to dispute if the subsidy level exceeds the WTO's limit of 10 per cent of total production of a particular crop.

"It will be a great moment for the WTO and for India, if indeed both are agreed to. But we need to work equally hard at correcting the course of the agriculture subsidy and food procurement regimes in India," said Pradeep Mehta, secretary-general of CUTS International, a trade advocacy group.

Yet another requirement is that countries using the peace clause will have to notify the WTO's committee on agriculture that it is exceeding or at risk of crossing the prescribed limit of subsidies.

"Unless these conditions are addressed India may not actually be able to use the peace clause at all. India should not be in a haste to sign the TFA without having ensured a fully usable and meaningful peace clause. Agreeing to the TFA now will also be a strategic blunder," a letter by the Indian Coordination Committee of Farmers' Movement stated.

While addressing Indian industry on Monday US Trade Representative Michael Froman categorically stated India would get a permanent peace clause provided it met the conditions laid out in the Bali Agreement.

The special GC meeting was decided after India and the US reached an understanding on food security. A formal GC is expected to be held on December 10.