UPSC Mains 2014 GS Paper 2 Q20: model answer

In July 2014 India refused to sign the protocol for the WTO's Trade Facilitation Agreement unless members agreed to a permanent solution on food stockholding. Four months later the US agreed to extend the 'peace clause' indefinitely.

Mandate of the WTO

• Set up in 1995, succeeding the GATT; 166 members.
• Administer trade agreements on goods, services (GATS) and intellectual property (TRIPS).
• Settle disputes.

How binding are its decisions?

• Agreements are binding once ratified; decisions are taken by consensus.
• Dispute rulings are binding; the winner may retaliate if the loser does not comply.
• But since December 2019 the Appellate Body has been unable to function, because the US blocked appointments. Losing parties can appeal 'into the void', weakening enforcement.

The food security issue

• Under the Agreement on Agriculture, support that distorts prices is capped at 10% of production value for developing countries.
• The reference price is fixed at 1986–88 levels, so India's MSP purchases for public stocks appear to exceed the limit.
• India needs stocks for the NFSA.

India's stand

• Bali (2013): an interim 'peace clause' protected stockholding programmes from challenge.
• 2014: India insisted on making it indefinite until a permanent solution; agreed in November 2014.
• In 2020 India became the first country to invoke the peace clause, for rice.

Assessment

India's stand protects food security and farmers, and it has held firm through later ministerials. But it must also show that its stocks do not distort world markets, to keep partners' trust.