Traditionally, most multilateral organizations have been dominated by the United State of America. The country has used its financial hegemony to dictate its terms of policy in multilateral forums. But, the rise of Asian powers and the progression of the multilateral world have started to challenge its big brother behaviour. On every multilateral platform, India is giving upfront challenges to the US and securing its national interest in an assertive way.
Baby cry of Americans
Rattled by India’s strong position at the World Trade Organization, about 12 US congressmen have written letters to its President, urging him to file a formal request for a consultation with India over the country’s ‘dangerous trade-distorting practice’.
In the letter, the Congressmen stated that “current WTO rules allowed the governments to subsidize up to 10% of the value of commodity production. However, the Indian government continues to subsidize more than half of the value of commodity production for several commodities, including rice and wheat.”
They alleged that India’s lack of rule-following has put the production of rice and wheat in America at a depressing level, and has brought its country’s farmers to a disproportionate disadvantaged level.
An effort to put pressure on India
The letter sent by these congressmen is nothing but an attempt to create pressure on India. The current prescribed WTO rules allow only 10% of farm subsidies of the total farm produced. However, invoking the peace clause provisions, India has constantly breached the subsidy ceilings.
As the world is fighting a global food crisis due to unprecedented conditions like the pandemic and Ukraine war, India was able to secure an exemption from the subsidy ceiling in the recently concluded WTO’s ministerial meeting.
India secured an exemption from the subsidy ceiling with respect to the foodstuffs purchased for non-commercial humanitarian purposes by the World Food Programme. Further, Piyush Goyal was also able to get an exemption from blanket food export restrictions. In order to maintain the domestic food shortage and price stability, India made sure that the blanket exemption of WFP exports is not allowed.
Moreover, the report suggests that India, along with 80 other developing countries, has sought a revision of the over three decades-old external reference prices of farm commodities. It is pertinent to note that, WTO calculates the current domestic farm subsidies of the developing nations with decades-old price references. This is the first time that India, with the help of G-33 and other African nations, has managed to partner with about 80 countries to seek permanent solutions at WTO.
Further, the permanent solutions in the WTO will provide India with immunity to subsidy schemes like minimum support prices and the PM-Kisan program, under which Rs 6,000 are directly transferred to farmers annually.
The letter of US congressmen to Biden is nothing but an attempt to create pressure on developing countries like India. As the US has a huge base of commercial farmers, they remain in an advantageous position of price competition. Large production bases and the mechanization of farming activities reduce the prices of farm produce and bring the small farmers of the world at disadvantageous positions. If permanent reforms are brought in the WTO with respect to the farm subsidy, the US will be permanently dethroned from the Big Brother position.
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