Rice Market: India Under WTO Scrutiny, Actively Tries to Avoid Subsidy Challenges

    ©Debra L Ferguson Stock Photography

    Late last month, members of the World Trade Organization’s (WTO) Committee on Agriculture held a regularly-scheduled meeting to discuss existing ministerial decisions, COVID-19, and impacts on farm policy around the world. While global COVID-19-driven food security measures took up a significant portion of the meeting, the United States kept up the pressure on outstanding domestic support concerns regarding other members, like India.

    India was targeted by other member countries for lack of transparency around their agriculture policies and incomplete notifications to the WTO that tally their farm subsidies over the years.  India was questioned over, admittedly, providing prohibited export subsidies through the Transport and Marketing Assistance scheme that was introduced in 2019.

    The program reimburses part of the freight costs for exported agricultural products to North America, Europe, and other regions, ultimately allowing exporters to reduce the price for which they sell their commodities overseas.

    WTO members also grilled India on their public stockholding program, where the government purchases commodities from farmers at a set/floor price and then sells the commodities to the public, usually at a loss.  The value of the public stockholding program expenditures far exceeds India’s WTO subsidy limit.

    The Indian government has admitted its rice stockholding program violates WTO commitments, but uses flawed methodology to disguise the scale of its support.

    For nearly a decade, India has been the world’s largest rice exporter and the second largest producer.  India also is responsible for providing the second highest tonnage of rice imports into the U.S.  Their admitted export and domestic support subsidies, along with a series of subsidies for inputs like fertilizer, irrigation, seed, and fuel, have all contributed to their dominance on the world stage.

    Many of these subsidies, both separate and in aggregate, appear to be violations of India’s WTO commitments.

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    “India continues to claim that a number of abstruse exemptions from WTO rules allow it to provide virtually unlimited subsidies, especially for rice, but we know that they’re way out of compliance with their subsidy commitments,” said Bobby Hanks, a Louisiana rice miller and chair of the USA Rice International Trade Policy Committee.

    In May 2018, the U.S. issued its first ever counter-notification to the WTO against how India reports its rice and wheat subsidies.  The U.S. continues to press India for transparency in how they administer their agricultural subsidy programs, calling for a level playing field for American producers and ultimately, WTO compliance.

    “The limited exemptions in the WTO decisions do not allow for programs that distort trade, like India’s programs do,” said Hanks.  “India is abusing this flexibility to the detriment of other rice producing nations, including the U.S, and has stretched it past the breaking point.  The scale of India’s programs and rice exports mean avoiding trade distortion is impossible.

    “If India wants to be a responsible world power, it should ensure it abides by its WTO commitments and not hide behind its status as a ‘developing’ nation that happens to ship more than $5 billion in agricultural products to the U.S. annually.  We would like to see India held accountable through dispute settlement, especially since attempts to shield its programs don’t stand up to scrutiny.”

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