India faces flak at WTO for not notifying curbs

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NEW DELHI
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India is facing criticism from several World Trade Organization (WTO) members for failing to notify the trade body of its numerous export restrictions to secure domestic food supplies before national elections next year, three people aware of the development said.

Commerce secretary Sunil Barthwal will chair a high-level meeting on Friday to potentially discuss India’s priorities at WTO’s 13th Ministerial Conference (MC13) in Abu Dhabi in February and chalk out arguments explaining New Delhi’s stance on the issue.

This comes as India, the largest rice exporter, imposed curbs on exports of the commodity after a rainfall deficit during the monsoon triggered food security concerns. Global food prices were on the rise after Russia invaded Ukraine last year, and the situation was exacerbated after Russia withdrew from the Black Sea Grain Initiative. Both Russia and Ukraine are major producers of wheat and oilseeds.

“Not notifying export restrictions was a conscious decision. It must be understood that export restriction is a right given to WTO members if there is a threat to food security. The WTO agreement on agriculture says the members should notify restrictions in advance ‘as far as possible’. And countries are ‘not bound by it’,” one of the three people said on condition of anonymity.

The official also referred to Article 12 of WTO’s Agreement on Agriculture. It states: “Before any member institutes an export prohibition or restriction, it shall give notice in writing, as far in advance as practicable, to the Committee on Agriculture comprising such information as the nature and the duration of such measure…”

“The provisions of this Article shall not apply to any developing country member unless the measure is taken by a developing country member which is a net-food exporter of the specific foodstuff concerned,” the text states.

A second official said India has also sought policy space to prevent food shortages and believes imposing restrictions from time to time, if needed, is an important contingency policy measure.” However, India has not filed any export restriction (ER) notification at WTO,” the official added.

The second official added that India also aims to oppose any attempt by other members to make “export restriction more difficult to use”.

Queries sent to a spokesperson for the commerce ministry remained unanswered.

While India’s retail inflation eased in August as food prices moderated, it remained above the upper end of the central bank’s target band for a second consecutive month.

Retail inflation in August slowed to 6.83% from a 15-month high of 7.44% in the preceding month but remained above the central bank’s 2-6% comfort zone.

Meanwhile, global food prices continue to remain at record highs. According to the United Nations Conference on Trade and Development (UNCTAD) report, price levels are still high compared to pre-war and pre-pandemic levels. “Food prices in January 2023 were 45% above the average over the past two decades,” UNCTAD said. “However, price levels are still high when compared to pre-war and pre-pandemic levels.”

The first official added that a large number of countries do not follow the practice of notifying export restrictions and have raised concerns at WTO. “When India’s rice exports were rising, there was a concern. Now, when they are restricted, there is still a concern,” the official said.

The officials further explained that news of export curbs creates practical difficulties as traders rush to boost purchases and push exports, defeating the purpose of imposing such restrictions.

The second official added that large trading blocs like the European Union (EU) have also chosen not to notify export restrictions. “India’s record is high in this matter. We managed to notify 95% of the restrictions. Often, when the restriction is seasonal in nature, and for a short term, it creates practical difficulty,” the person added.

“Developed countries are unhappy with export restrictions by developing countries. That has been a sticking point in free trade agreements, too. India always wants to keep the policy space. The other side (e.g. EU) wants to curtail it,” said Sangeeta Godbole, a former government revenue officer.

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