India firm on its stand on Peace Clause

TNPSC Current Affairs - November 2017 by TNPSC Guru for Mains

India is firm on its stand on right to give subsidies to farmers through the Minimum support Price (MSP) whether or not if it breaches the WTO’s 10% Subsidy Norms.

India has signed Peace clause treaty on 2013 at Bali that no countries can complaint against India if it breaches WTO’s subsidy norms. India will strongly oppose to give up Peace clause if permanent solution on subsidy brings more burdens to India on the upcoming WTO Ministerial Meet at Buenos Aires in Argentina. 

Back Ground: 

• As per the WTO rules, For Developing countries  can give subsidy upto 10 Per cent of Country’s agricultural GDP  and 5 Per cent for Developed Nations which is called de minimis level of support.
• Developed nations are entitled to provide the de minimis level of support , but developed nations like US, EU, Canada, and other wealthy nations providing more trade-distorting subsidies to their farmers which is higher than the ceiling applicable to developing nations.
• This makes developed nations products cheaper in International market comparing to developing nations products
• So  most of the time India breaches the WTO’s de mnimus support level,, because based on the WTO de Minimus support, India can give only 10 % of total monetary value of production based on base year 1986-88 to Farmers, which is lesser than subsidy given by Developed nation.
• For example in 1986-88 the total monetary value of production of US is 100 crore , So US can give 5% of subsidy to their farmer that means 5 crore of its production.
• For India the total monetary value of production is 10 crore on 1986-88, so as per WTO Rules India can give 10 % as its subsidy that means 1 crore. It is much lesser than developed nations.
• It  automatically Indian Farmers getting less subsidy comparing to Developed nations and makes developed nation products cheaper than products form developing nations.
• India is strongly opposing this difference and wants to change the base year around 2000 because India’s production is good comparing to 1986-88.  

About Peace Clause: 

• Peace clause is issued on 9^th Ministerial conference of WTO at Bali on 2013 to the developing countries.
• As per the Peace clause developing countries will be allow to give more than 10 % subsidy for their Farmers or people for 4 years till permanent solution sought out on 2017.
• No other country should complaint about this to WTO for any breach.