Analytical Note, November 2014

Subsidies and food security in WTO: a permanent solution is still pending

The current WTO rules applicable to public stockholding for food security purposes illustrate the imbalances present in the WTO rules on agriculture. The calculation of the level of subsidies on the basis of outdated fixed reference prices is a flaw that needs to be corrected. Moreover, the rigid limits imposed in the calculation of the AMS ironically penalize developing countries that did not subsidize agricultural production at the time the Uruguay Round was concluded, rather than those with a history of heavy subsidization. 

Despite the support of food security policies that developed countries have voiced at the UN and WTO, the compromise reached in Bali shows no real willingness of those countries to solve a problem of vital importance for all countries, particularly those with a large poor population. The implementation of public stockholding for food security purposes can support local food systems and be instrumental to the realization of the human right to food.

Though highly imperfect, the Bali compromise on this issue was a step in the right direction. However, given the limitations and the provisional nature of the ‘peace clause’ negotiated at the Bali WTO Conference and the uncertainty about the possibility of reaching a satisfactory permanent solution in four years, it has been legitimate to question, as India and other developing countries have done, whether the price demanded by developed countries for the Bali compromise (notably the acceptance of the TFA) was warranted. As already suggested after the Bali Conference, new concessions are likely to be sought, namely in terms of industrial tariffs and services, to give consensus to a definitive solution for stockholding programs implemented in developing countries. Countries seeking a permanent solution to the issue of public stockholding for food security would need, hence, to build up strong alliances to amend the current WTO rules, without being forced to admit new disciplines limiting their policy space to apply measures that are important to achieve their development objectives.

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