India should soften its demands related to the agricultural subsidies at WTO and focus
more on demanding the liberal trade in services.’ Critically evaluate the statement citing the
Indian stand in the recent WTO Ministerial Conferences.
Answer:
For last five years since the Bali Ministerial of 2013, India has been demanding ‘permanent solution’ on the matter of the agricultural subsidies. Under this, India seeks to implement changes in the rules related to the calculation and classification of the agricultural subsidies as stated in the Agreement on Agriculture of WTO. India demands that the formula of MSP subsidy calculation needs to be revisited as it is based on the reference price taken during the 1986-88 period. It exaggerates the subsidy given by economies like India and China. India also demands that since the MSP subsidy is being given for the purpose of food security, it should be shifted from Amber Box to the Green Box (non-trade distorting subsidies). Most of these demands are justified as the developed countries like US and those of EU, have given massive amount of subsidy to their farmers which they have shifted to the Green Box to avoid reduction. However, they give most subsidies in the form of decoupled payments, not directly linked to production unlike India. In services, India is demanding trade facilitation which refers to the implementation of the earlier liberalization promises by the developed countries like the simplification of visa rules. India demands opening up of Mode 1 and Mode 4 services in general which can benefit Indian IT and ITES sectors along with the skilled migrants. Although both the demands by India seem justified, as a negotiating member, focusing on one issue delivers better results. Services liberalization can have greater impact on GDP growth than that of permanent solution in agriculture. It can be defended better by India through the free trade principle also. However, agriculture is still important for job creation and food security goals of India. Still, India’s insistence in WTO that no other agreement will be signed unless a permanent solution is sought on agricultural subsidies is impeding other negotiations. Thus, India should keep on making these demands, but remain open to other agreements as well. But, our negotiations on services should be tough so that we can maximize the benefits of services trade.
more on demanding the liberal trade in services.’ Critically evaluate the statement citing the
Indian stand in the recent WTO Ministerial Conferences.
Answer:
For last five years since the Bali Ministerial of 2013, India has been demanding ‘permanent solution’ on the matter of the agricultural subsidies. Under this, India seeks to implement changes in the rules related to the calculation and classification of the agricultural subsidies as stated in the Agreement on Agriculture of WTO. India demands that the formula of MSP subsidy calculation needs to be revisited as it is based on the reference price taken during the 1986-88 period. It exaggerates the subsidy given by economies like India and China. India also demands that since the MSP subsidy is being given for the purpose of food security, it should be shifted from Amber Box to the Green Box (non-trade distorting subsidies). Most of these demands are justified as the developed countries like US and those of EU, have given massive amount of subsidy to their farmers which they have shifted to the Green Box to avoid reduction. However, they give most subsidies in the form of decoupled payments, not directly linked to production unlike India. In services, India is demanding trade facilitation which refers to the implementation of the earlier liberalization promises by the developed countries like the simplification of visa rules. India demands opening up of Mode 1 and Mode 4 services in general which can benefit Indian IT and ITES sectors along with the skilled migrants. Although both the demands by India seem justified, as a negotiating member, focusing on one issue delivers better results. Services liberalization can have greater impact on GDP growth than that of permanent solution in agriculture. It can be defended better by India through the free trade principle also. However, agriculture is still important for job creation and food security goals of India. Still, India’s insistence in WTO that no other agreement will be signed unless a permanent solution is sought on agricultural subsidies is impeding other negotiations. Thus, India should keep on making these demands, but remain open to other agreements as well. But, our negotiations on services should be tough so that we can maximize the benefits of services trade.
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