Brazil gave a clear warning to India and several other developing countries this Wednesday at the World Trade Organization (WTO): there will be no blank check for granting agricultural subsidies at the expense of Brazilian exports.

With this position, Brazil reacts to a double attempt to close agricultural markets in negotiations at the conference that will bring together ministers of Agriculture from the 164 member countries of the organization — and which will probably be in the week that begins on June 13, in Geneva.

The first is the demand from a group of developing countries led by India for a permanent solution that allows the formation of public stockholding for food security purposes (PSH).

New Delhi wants the creation of a definitive rule for the adoption of new programs with administered prices and with the granting of unlimited and unrestricted subsidies for a wide variety of commodities — including sugar — that cannot be challenged in the Dispute Settlement Body of the WTO.

The second attempt by this group of developing countries, which includes several Asian and African nations, contemplates the application of special safeguard measures – which is reflected in tariff increases on agricultural products when there are abrupt price declines or sudden increases in imports.

On both fronts, agricultural discussions at the WTO, instead of gradually moving in the direction of liberalization, could go in the opposite direction, with more obstacles for exports to India, Indonesia and several other major markets.

Not only Brazil and other Latin American countries would be affected. The U.S. would also be hit at some point, according to an observer on the trade scene.

For exporters, India wants to give additional subsidies without showing any transparency — that is, without saying how much it gives to farmers, how much it has in stock and what is being diverted to the international market or not.

The Indians allege difficulties in this, which leads some partners to ask how it is possible for New Delhi to have a nuclear program if it cannot say how much it spends in support of its sugar producers, for example.

On the other hand, special safeguard measures are a mechanism normally used in balance with an opening of the market, and not as the proponents intend to do now, just to keep the doors closed.

India has become the largest rice exporting country in the world, and the third largest for sugar, boosted by an agreement made at the 2013 WTO conference in Bali (Indonesia), when it obtained a temporary solution to be able to grant more subsidies to build up public stockholding.

On Wednesday, however, Brazil sought to stop the attempt to establish permanent rules for even more unlimited subsidies. The country warned that the mandates on public stockholding could be reviewed, as the consensus that created them no longer exists.

The Brazilian position is that PSH, as it is currently presented, actually causes food insecurity. For Brazil, food security requires a reduction in the volume of hundreds of billions of dollars in agricultural subsidies, not the other way around.

Moreover, the country argues that malnutrition is not a problem of lack of food, but of access to food. Open trade ensures that food can arrive faster and at cheaper prices, even to poorer countries with an agricultural sector that cannot compete with those that heavily subsidize their producers.

In other words, the $60 billion in subsidies offered by India affect farmers in Bangladesh, Vietnam, Vanuatu, among many others.

The message was that Brazil is not against anyone, and that preserving Brazilian exports is part of the solution, not the problem. The country is willing to negotiate a more modern understanding of food security, in order to react to the real causes of the problem. But what Brazil will not accept is giving a blank check to India and other countries for granting subsidies.

Source: Valor International

https://valorinternational.globo.com