NEW DELHI: India and China have together demanded at the World Trade Organization that developed economies lower farm subsidies to their farmers under the agreed multilateral trade rules.
The two have proposed that developed economies including the US, the EU and Canada do away with $160 billion of trade-distorting farm subsidies that they give to products including cotton, wool and tobacco.
They have recommended that half the difference between the actual support and 10% Aggregate Measurement of Support (AMS) be reduced in 2019 with equal steps.
Under the WTO, the AMS or ‘Amber Box’ is capped at 5% of the value of production for developed countries (de minimis support), but in many cases the actual support has exceeded the ceiling.
In a joint proposal to the WTO, the two countries suggested a formula for a gradual reduction and an eventual elimination of these incentives by developed countries.
“The product-specific support has to be ultimately brought down to zero but till the time it is there, it should be limited to 5%,” said an official aware of the proposal.
India and China argued that most the developing members cannot provide product-specific Amber Box support exceeding de minimis limit, but developed countries are not constrained by this norm which gives them “significant flexibilities” to provide support to their agriculture.
This distorts production and trade by “providing a significantly high amount of subsidies compared to the value of production of the products concerned, concentrating the subsidies in a few products and shifting the products in which the subsidies are concentrated”, they said.
This is the second joint submission by the two countries on elimination of AMS. In a proposal last year, they said the US has provided subsidies exceeding 50% of the value of production for dry peas (57%), rice (82%), canola (61%), flaxseed (69%), sunflower (65%), sugar (66%), cotton (74%), mohair (141%) and wool (215%).
The EU provided more than 50% of product-specific support for several products. These include butter (71%), skimmed milk powder (67%), apples (68%), courgettes (51%), cucumber (86%), lemon (60%), pear for processing (82%), tinned pineapples (108%), tomatoes for processing (61%), rice (66%), olive oil (76%), white sugar (120%), tobacco (155%) and silkworms (167%).
The product-support given by Canada was more than thrice the value of production in 2009.