WTO MC13: India’s Stance on Agriculture and Fisheries Subsidy

Introduction

The World Trade Organization (WTO) held its 13th Ministerial Conference (MC13) from February 26 to March 2, 2024, in Abu Dhabi, United Arab Emirates (UAE). As the highest decision-making body of the WTO, the Ministerial Conference brings together trade ministers from 166 member states to negotiate multilateral rules governing international commerce.

At MC13, the global trade discourse was dominated by critical disagreements between developed and developing nations over key sectors: Agriculture and Fisheries Subsidies. India emerged as a central voice representing the interests of the Global South, firmly advocating for food security, livelihood protection, and the principle of Special and Differential Treatment (S&DT).

For India, the negotiations at MC13 were not merely about trade expansion, but fundamentally about protecting the socio-economic welfare of over 1.4 billion citizens, including more than 500 million individuals dependent on agriculture and nearly 14 million small-scale and artisanal fishers.

Historical Background / Context

To understand India’s positions at MC13, it is essential to trace the historical framework of the WTO regarding agriculture and fisheries.

                    ┌─────────────────────────────────────────┐
                    │      WTO Framework & Negotiations       │
                    └────────────────────┬────────────────────┘
                                         │
                   ┌─────────────────────┴─────────────────────┐
                   │                                           │
        ┌──────────▼──────────┐                     ┌──────────▼──────────┐
        │     Agriculture     │                     │      Fisheries      │
        └──────────┬──────────┘                     └──────────┬──────────┘
                   │                                           │
         ┌─────────┴─────────┐                       ┌─────────┴─────────┐
         │ Agreement on Ag.  │                       │   Targeting SDG   │
         │ (AoA) 1995        │                       │   14.6 Mandate    │
         └─────────┬─────────┘                       └─────────┬─────────┘
                   │                                           │
         ┌─────────┴─────────┐                       ┌─────────┴─────────┐
         │ - Box Subsidies   │                       │ - Overfishing &   │
         │ - 10% De Minimis  │                       │   Overcapacity    │
         │ - 1986-88 ERP     │                       │ - IUU Fishing     │
         └─────────┬─────────┘                       └─────────┬─────────┘
                   │                                           │
         ┌─────────┴─────────┐                       ┌─────────┴─────────┐
         │ Bali Peace Clause │                       │  MC12 Agreement   │
         │ (2013)            │                       │  (Phase 1, 2022)  │
         └───────────────────┘                       └───────────────────┘

1. Agreement on Agriculture (AoA) and Public Stockholding

The WTO Agreement on Agriculture (AoA), which came into effect in 1995, categorizes agricultural domestic support into three distinct "boxes":

• Green Box: Subsidies that cause minimal or no trade distortion (e.g., direct income support to farmers, R&D, infrastructure support). These are exempt from reduction commitments.
• Blue Box: Direct payments under production-limiting programs. Also exempt from reduction commitments.
• Amber Box: Trade-distorting subsidies, including market price support (e.g., Minimum Support Price or MSP) and input subsidies (e.g., electricity, fertilizers).

Under the AoA, developing countries are subject to a de minimis limit of 10% of the total value of agricultural production for Amber Box domestic support. However, this subsidy limit is calculated using an External Reference Price (ERP) based on 1986–88 global food prices. Because international food prices have risen drastically due to inflation over the last four decades, India’s public procurement programs—such as procurement under the National Food Security Act (NFSA)—risk breaching this 10% ceiling, even though real support provided to farmers remains modest.

To address this structural distortion, the 2013 Bali Ministerial Conference (MC9) adopted an Interim Peace Clause. The Peace Clause prevents member countries from legally challenging a developing nation’s breach of the 10% domestic support limit under public stockholding programs for traditional staple food crops, provided certain transparency conditions are met. However, India has consistently demanded a Permanent Solution to Public Stockholding (PSH) to ensure permanent legal immunity for its food security operations.

2. Fisheries Subsidies Mandate

Fisheries subsidies negotiations align with UN Sustainable Development Goal (SDG) 14.6, which mandates the prohibition of certain forms of fisheries subsidies that contribute to overcapacity and overfishing, and the elimination of subsidies that contribute to Illegal, Unreported, and Unregulated (IUU) fishing.

At the 12th Ministerial Conference (MC12) in Geneva (2022), members adopted a partial Agreement on Fisheries Subsidies (Phase 1), prohibiting support for IUU fishing and fishing on overfished stocks. MC13 was tasked with finalizing Phase 2, which addresses subsidies that contribute to Overfishing and Overcapacity (OFOC) worldwide.

Key Features / Objectives of India's Stance at MC13

India entered MC13 with clear, well-defined strategic imperatives across key negotiating pillars.

1. Agriculture and Public Stockholding (PSH)

• Demand for a Permanent Solution: India firmly insisted that a Permanent Solution on PSH must be delivered before or alongside any decisions on other agricultural pillars (such as market access or export restrictions).
• Updating the External Reference Price: India advocated for modifying the outdated 1986–88 ERP benchmark to reflect current market realities, taking into account price inflation and currency fluctuations.
• Expansion of Coverage: India demanded that the permanent solution cover all food grains and agricultural commodities required for national food security, rather than being restricted to traditional crops procured under existing schemes.
• Protection of Smallholder Farmers: India highlighted that its domestic support (such as input subsidies for power, fertilizer, and seed) is a social safety net designed to sustain resource-poor and small-holding farmers who cultivate less than two hectares of land.

2. Fisheries Subsidies and Special & Differential Treatment (S&DT)

• Principle of Polluter Pays: India argued that countries engaging in large-scale, industrial deep-sea fishing—primarily Distant Water Fishing Nations (DWFNs)—are historically responsible for overfishing and global ocean depletion. Therefore, these nations must bear the primary burden of reducing subsidies.
• Carve-Outs for Small-Scale Fishers: India proposed that small-scale, artisanal fishers operating within Exclusive Economic Zones (EEZs)—up to 200 nautical miles from the coastline—be completely exempted from subsidy bans.
• 25-Year Transition Period: India demanded a 25-year grace period/transition timeframe under Special and Differential Treatment (S&DT) for developing nations that do not engage in distant-water fishing, allowing them time to develop sustainable domestic marine infrastructure.

Significance for India

India’s firm position at WTO MC13 carries major socio-economic and strategic implications:

                          ┌──────────────────────────────────────┐
                          │     Strategic Value for India       │
                          └──────────────────┬───────────────────┘
                                             │
      ┌──────────────────────┬───────────────┴───────────────┬──────────────────────┐
      │                      │                               │                      │
┌─────▼──────────────┐ ┌─────▼──────────────┐ ┌──────────────▼──────┐ ┌──────────────▼──────┐
│ Food Security &    │ │ Livelihood         │ │ Policy Space &     │ │ Global South         │
│ MSP Protection     │ │ Preservation       │ │ Sovereign Autonomy │ │ Coalition Leadership │
└────────────────────┘ └────────────────────┘ └────────────────────┘ └──────────────────────┘

1. Guaranteeing National Food Security

India’s food security architecture relies on domestic procurement through the Minimum Support Price (MSP) and distribution via the Public Distribution System (PDS) under the National Food Security Act (NFSA), which covers over 800 million citizens. Securing a permanent solution for PSH shields these programs from global litigation under WTO dispute mechanisms, ensuring uninterrupted food grain distribution to vulnerable populations.

2. Safeguarding Rural Livelihoods

In India, farming is predominantly a livelihood-driven sector rather than a commercial agri-business enterprise. Over 85% of Indian farmers belong to the small and marginal categories. Similarly, marine fishing in India is largely artisanal, using non-motorized or low-capacity motorized boats. Retaining subsidy mechanisms for inputs (fuel, boats, nets, fertilizer, power) prevents rural distress and economic marginalization.

3. Exercising Policy Autonomy

Accepting binding caps on domestic market price support without structural modifications to the 1986-88 ERP benchmark would constrain the government's ability to adjust MSP rates in line with inflation and rising production costs. Standing firm at MC13 helped safeguard sovereign policy space.

4. Leadership of the Global South

By aligning with key coalitions such as the G33 (a coalition of developing countries pressing for agricultural trade flexibility), the African Group, and the LDC (Least Developed Countries) Group, India reinforced its role as a leading advocate for equity and development-oriented trade policies in international forums.

Challenges and Key Bottlenecks at MC13

Despite intense negotiations, MC13 concluded without consensus on Agriculture and Phase 2 Fisheries Subsidies, maintaining the status quo. Several systemic issues contributed to this stalemate:

1. Divergence Between Developed and Developing Nations

• Agricultural Disagreements: Developed nations (led by the United States) and major agricultural exporters (the Cairns Group, including Australia and Brazil) refused to yield on PSH without simultaneous commitments from developing nations on market access reductions, subsidy caps, and increased transparency.
• Fisheries Disagreements: Advanced fishing powers resisted India’s demand for a 25-year transition period, advocating instead for a much shorter transition (around 7 to 10 years) and stringent operational restrictions within EEZs.

2. Proliferation of Plurilateral Agreements

Developed nations and select developing countries increasingly favored Plurilateral Joint Statement Initiatives (JSIs)—such as the Investment Facilitation for Development (IFD) agreement and E-Commerce negotiations—over traditional multilateral consensus. India and South Africa strongly opposed integrating non-mandated plurilateral agreements into the official WTO framework, arguing that doing so undermines the core multilateral and consensus-based structure of the organization.

3. Appellate Body Impasse

The WTO Dispute Settlement System remains severely weakened because the Appellate Body has been non-functional since December 2019 due to the veto by the United States on the appointment of new judges. This institutional paralysis diminishes compliance incentive among member states and complicates dispute enforcement.

4. Unilateral Environmental Regulations

India raised concerns over emerging unilateral, non-tariff trade policies adopted by developed blocs under the banner of climate action—such as the European Union’s Carbon Border Adjustment Mechanism (CBAM) and EU Deforestation Regulation (EUDR). India views these measures as disguised trade restrictions that disproportionately burden developing economies.

Conclusion / Way Forward

The outcome of WTO MC13 underscores the growing fragmentation of global trade negotiations. While no comprehensive multilateral agreement was reached on Agriculture or Fisheries Subsidies, India successfully protected its primary national interests, ensuring that domestic food security initiatives and small-scale fishers remain protected under existing frameworks.

Way Forward

1. Constructive Multilateral Engagement: India should continue to engage proactively with trade partners to build consensus around a updated methodology for calculating the External Reference Price (ERP), incorporating modern market indicators and inflation metrics.
2. Strengthening Global South Alliances: Consolidating coalitions with the G33, African Group, and Cotton-4 (C4) nations will be vital to counter collective pressure from developed trade blocs in future negotiations.
3. Comprehensive Fishery Management: Domestically, India can enhance marine resource mapping, promote sustainable fishing practices, and build robust digital tracking systems for its coastal fleet to strengthen its negotiation standing regarding Illegal, Unreported, and Unregulated (IUU) fishing controls.
4. Comprehensive WTO Reform: A fully restored, functioning two-tier dispute settlement mechanism is crucial for global trade stability. Member states must prioritize restoring the Appellate Body to preserve rule-based, equitable global commerce.

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