India rejects US plea on WTO peace clause

NEW DELHI: India has rejected the US attempt to invoke fresh life into the expired Peace Clause in agriculture trade, which prevented countries from challenging subsidies provided by developed countries on agricultural exports at the World Trade Organisation (WTO).

India’s rejection of the extension plea was based on the argument that since subsidies provided to industrial products could be challenged, there was no justification for giving special treatment to agri products.

The US has been trying to reactivate the peace clause, which expired on January 31, ’04, since it resulted in its agriculture exports being challenged by countries like Brazil (cotton) and Canada (corn). Brazil also won a case against sugar subsidies being given by the EU last year following the expiry of the Peace Clause.

Speaking to ET, commerce & industry minister Kamal Nath said that in his recent meeting with US trade representative Susan Schwab, he maintained that if the Peace Clause was reinvoked, it should not be exclusive to agriculture.

“The Peace Clause is neither in the Doha mandate nor in the framework. If it has to be woven into the round, it should be negotiated in all aspects of the WTO,” he said. The US had requested for a renewal of the Peace Clause in October ’05.

When developing countries refused to oblige, the EU took centre-stage and argued for extension of the clause during the Hong Kong ministerial meet in December ’05.

According to a report by international non-governmental agency Oxfam, the EU and US could face challenges from developing countries on $13 billion of illegal agricultural subsidies, including rice, corn and tomatoes.

While the EU claims that the reforms that it was bringing about in the common agricultural policy would make a huge dent in subsidies, the Oxfam report said that the reforms would not end the damage being done by dumping to developing countries.