Thailand’s criticism on India’s PDS

• Context (IE): Thailand has replaced its Ambassador to the WTO after India formally protested against her comments on India’s PSH (Public Stockholding) program.

Background

• The Thailand’s Ambassador criticised India’s rice procurement program (PDS).
• She suggested that India’s Public Distribution System (PDS) aims more at capturing the export market than benefiting the people.
• Tensions escalated between India and Thailand due to these comments.
• Consequently, Indian negotiators reportedly refused to participate in certain discussions where the Thai representative was present during the 13th Ministerial Conference of WTO in Abu Dhabi.

Cairns Group Concern

• The Cairns Group consistently challenges India’s PSH (Public Stockholding) program at the WTO.
• It claims that the program is heavily subsidized, distorting global food prices and harms the food security of other nations.
• The Cairns Group is also attacking the peace clause, triggered after India breached the de minimis limit.
  • The interim peace clause was put in place in 2013 under the Bali Agreement to protect developing countries from being challenged for breach of subsidy levels.
• Thailand belongs to the Cairns Group, consisting of 20 nations.

About Cairns Group Formed in 1986 in Cairns (City in Australia). It is a coalition of 20 agricultural exporting countries. Primary goal is to enhance global trade in agricultural produce by eliminating export subsidies and trade-distorting domestic support. Significance: They present a unified stance in multilateral trade talks at the WTO. Members: Argentina, Australia, Brazil, Canada, Chile, Colombia, Costa Rica, Guatemala, Indonesia, Malaysia, New Zealand, Pakistan, Paraguay, Peru, the Philippines, South Africa, Thailand, Uruguay and Vietnam, Ukraine. Note: India is not a member.

Concerns regarding India’s PDS

• India has breached the de minimis limit in the case of rice.
• The WTO norms say that the support given should be within the 10% de minimis limit in the case of developing countries such as India.
• India informed the WTO that,
  • The value of its rice production in 2019-20 was $46.07 billion.
  • Subsidies given worth $6.31 billion or 13.7%, as against the permitted 10%.
• India’s argument:
  • India has questioned the way subsidies are calculated at the WTO, saying it is calculated at a fixed and outdated 1986-88 price, which overestimates the subsidy. India is seeking to change it at the WTO negotiations on agriculture.
  • India has been arguing that the subsidy that it provides is far less than what the US and EU give.
    • Subsidy to Indian farmers: $300 per farmer.
    • Subsidy to US farmers: $40,000 per farmer.

Protesting farmers are demanding the removal of the agriculture sector from the WTO agreement. After India, Thailand is the second largest rice exporter in the world.

To know about the Agreement on Agriculture (AoA) in detail, visit > Agreement on Agriculture(AoA).