When it comes to business dealings or trade concessions, Indian authorities are usually smarter than others to exploit the system in their favour. Its latest example is the aggressive lobbying by India, ahead of the next World Trade Organisation (WTO) ministerial meeting, to get legal shelter for subsidy on rice exports to the world market. The issue of seeking more protection for Indian rice was floated during the G-33 countries recent consultations in Geneva as part of the proposals on agricultural reforms for Bali meeting to be held in December. India is seeking huge flexibility to distort rice production and trade in the name of food security and the G-33 proposal is meant to demand exemption from domestic support on the assumption that it is minimally trade distorting and is also linked with the food security of the country.
Seen closely, Indian proposal is meant to get legal cover to what it is already doing and capture a still greater share of the world rice market. The exemption sought by India is possible for a product that is in short supply in the country and its food security needs are heavily dependent on that product. India does not meet such a requirement. In fact, Indian stocks of rice are much higher than what the country needs and these stocks are exported at subsidised prices. As a result of Indian trade distorting subsidies, Pakistan has already lost its market share to India, primarily due to aggressive exports from Food Corporation of India - a state-owned organisation. Thailand and Vietnam have also been displaced from their top positions in rice exports and India has now gained number one position in exports by releasing stocks which are highly subsidised. As against this, while rice exports are a steady source of foreign exchange for the country, government of Pakistan got out of the business of rice exports about two decades ago and the whole business was now carried out by the private sector. Since India is already the largest exporter of rice, any exemption of rice will be distorting international trade. Further policy space to India would also mean an adverse impact on the food security of other smaller developing countries, which may not be big exporters but will lose their market share due to subsidised Indian exports to the world market. In particular, farmers of other countries who earn money through exports or by selling to domestic market will be very badly affected and their security will be threatened.
Also, if WTO provides legal cover to India for distorting market, it would be against its own principle of following market mechanism. As such, WTO should not support government take-over or unnecessary intervention in the process of distribution, warehousing, exports etc of a commodity. So far as Pakistan is concerned, it is in favour of enlarging the green box subsidies - non-prohibited subsidies - without any exemption to trade distorting support. This would encourage countries to invest in research and rely on investment etc for improving productivity rather than depending on trade distorting subsidies in the name of food security. It was, therefore, imperative that Islamabad, as a member of G-33, should uphold WTO discipline by taking other countries such as China and Indonesia on board who are already in agreement with Pakistan and try to resist Indian pressure to get legal shelter for subsidy on rice exports. If that is not done and Indian proposal is accepted, other countries would lose their competitiveness and such an undermining of WTO rules would have a negative impact on the livelihood of farmers in Pakistan and elsewhere in the world community.