At Ministerial Conference, WTO faces litmus test on food security issue

Global food insecurity has reached troubling dimensions, with the number of severely food-insecure people having doubled to 276 million during the past two years. Despite making all the correct noises, the World Trade Organization (WTO) members have failed to walk the talk as evident in divergent positions on food security.

In the upcoming 12th WTO Ministerial Conference (MC-12), more than 80 developing countries including least developed country (LDC) members have been demanding a permanent solution to the issue of public stockholding (PSH) programmes for food security purposes. However, their demand is almost rejected by a few countries with strong commercial interest in agriculture exports. Perhaps these countries fear a sharp dip in their exports to developing countries, if the latter start implementing robust public stockholding schemes.

However, the same countries are strongly backing another initiative, which seeks a blanket exemption of World Food Programme (WFP) purchases from export restrictions. In the context, the WFP issue and its linkage with the permanent solution entails a serious discussion.

The WFP was awarded the Noble Peace Prize 2020 for its contribution to global food security. It purchases food from surplus regions for distribution to distressed people in deficit areas. Proponents of WFP issue has argued that export restrictions imposed by a country can hamper the WFP purchase operations. To address this concern, some WTO members are demanding a blanket exemption for the WFP from export restrictions.

Concerns regarding exemptions

During a global food crisis, international prices of food generally remain high due to many factors including panic purchases by importing countries. It provides a golden opportunity for traders to maximise profit by exporting large quantities of domestic produce. However, excessive exports can result in domestic shortages. This can jeopardise the domestic food security of a supplier country due to inflationary pressure. To avoid such situations, many countries impose temporary export restrictions.

At the WTO, 35 LDC countries have opposed the blanket exemption of WFP purchases from export restrictions. These countries are concerned that unrestricted purchases by the WFP during a crisis may reduce domestic food availability, thus undermining the domestic food security of a supplier country.

No doubt, while undertaking purchase operations in various countries, the WFP follows the “do-no-harm” principle. However, the moot question is whether the government of a supplier country or WFP would be in a better position to assess any adverse impact of such purchases on the domestic food security. Based on the premise that the government would be in a better position, the LDCs are demanding safeguards to prevent unrestricted exports to WFP as they would not have recourse to effective WTO remedies if they agree for a blanket exemption for WFP.

Hypocrisy

The permanent solution to the PSH issue also has major implications for the WFP issue. Many developing countries such as Bangladesh, Egypt, China, Indonesia, India, Philippines, and Mali are using PSH to procure food at the administered price like minimum support price (MSP) to provide remunerative prices to farmers and distribute subsidized foodgrains to the poor. For instance, Indonesia procures rice at the administered price to implement a welfare scheme “Raskin” to distribute it at a subsidised rate. Similarly, India implements price backed PSH to provide affordable foodgrains to 80 crore people.

These countries are facing limited flexibilities to implement PSH at MSP due to the capping of support to farmers at 10 per cent of the Value of Production (VoP) of a relevant agricultural product. In case of support exceeding 10 per cent, other countries can pressurise the subsidising country to modify its MSP like policy.

The 2013 Bali Peace Clause provides some interim relief to developing countries until a permanent solution is agreed upon. It shields developing members from a legal challenge if support for PSH goes beyond 10 per cent. However, only traditional crops under the programmes that existed till 2013 are covered.

At the MC-12, most developing countries are demanding a permanent solution covering more crops and future programmes. Additionally, these countries seek exemption for exports from PSH stock for WFP purchases or if requested by developing countries during the food crisis.

The proponents of the WFP issue oppose the export of the PSH stock to the same institution. If proponents think that the global food security is threatened due to export restrictions on WFP purchases, then allowing the export of PSH stock would be a boon for the WFP operations. Denying the export of PSH stocks to the WFP exposes the hypocrisy of some members who are prioritising commercial interests over hunger.

India’s position

For India, achieving a permanent solution is a top priority. On WFP, India shares the concerns of LDC members and hence is unwilling to undertake a binding commitment for blanket exemption for WFP. India allows exemption from export restrictions to WFP and other countries on a case-to-case basis as evident from recent restrictions on wheat. Being a strong supporter of a permanent solution to the PSH issue, India seeks export from PSH to the WFP and other countries on a request basis.

Achieving a permanent solution and addressing the concerns of blanket exemption of WFP would be a litmus test for a successful MC-12. Can the WTO Members deliver these outcomes, when the poor and hungry in the world need it the most?

Authors are from the Centre for WTO Studies, IIFT, New Delhi. Views are personal