U.S. and Others Initiate Consultations Over India’s Rice Subsidies and Stockholding Under WTO Bali Decision

Time For Action written on clock face
Checking India's continued flaunting of WTO regulations
Jul 05, 2022
GENEVA, SWITZERLAND – Last week, the United States and other World Trade Organization (WTO) Members announced during WTO meetings here that they are taking an unprecedented path of action by initiating consultations with India on their trade-distorting rice subsidies.
“India makes up nearly half of global rice trade and much of its exported rice benefits from the government-established floor price, and then exported at low prices, distorting trade," said Bobby Hanks, rice miller and chair of USA Rice.  "USA Rice applauds the Office of the U.S. Trade Representative (USTR) and their colleagues at the USDA for starting this process of technical engagement with India regarding its rice support and egregious WTO violations.  This announcement is just one of many actions the U.S. government can take to engage India at the WTO regarding its rice subsidies and we are hopeful they will continue to take more actions in this direction.”
In March 2020, India notified its support to the WTO for rice subsidies for 2019, and again in March 2021 for 2020, and then again in 2022.  According to its notifications, India’s market price support for rice totaled approximately $5 billion in 2019, $6.32 billion in 2020, and jumping to $6.9 billion in 2021.  Based on India’s reported values of production -- $43.67, $46.1, and $45.6 billion, respectively -- the support levels have been 11.46, 13.71, and 15.14 percent, exceeding the 10 percent de minimis limit.  However, actual support is likely much higher – more than 80 percent – because India only includes actual procurement, not total production, in its calculations, contrary to WTO rules and precedent.

India agrees they exceeded their de minimis limits for rice subsidies in the three years that they have notified their support to the WTO, and unsurprisingly, they have claimed shelter from a WTO dispute settlement challenge under the 'Bali Peace Clause.'  It is important to clarify that these consultations are targeted towards India’s use of the Bali Peace Clause which gives them the ability to build government stocks of food, however, it stipulates that WTO Members cannot export those subsidized government stocks to the extent that it distorts global trade.  This action is not the initiation of formal consultations for a WTO dispute settlement case.
The U.S. was not alone in pursuing transparency improvements for India, but was joined by the governments of Australia, Canada, Japan, Paraguay, Thailand, and Uruguay in initiating the Bali consultations.  All of those governments have expressed concerns regarding the impacts of the Indian government’s public stockholding programs for rice, wheat, and other commodities on global agricultural markets and seek to receive additional information from India.

"At last month's ministerial conference, we witnessed India's renewed attempts to force WTO Members to remove the limited constraints of this peace clause and write new rules that would give India practically unlimited room to dump subsidized rice on global markets," Hanks said.  "Fortunately, this was a bridge too far for the membership, and we hope that India will get the message and come to the consultations in good faith.  If not, we expect the governments engaged in these consultations will quickly move to the next logical step and initiate a formal dispute settlement case."

The U.S. rice industry has been significantly impacted over the last decade as India has nearly tripled their export volume, flooding the world rice market with cheap, subsidized rice and made the U.S. and other rice exporters less competitive both within our domestic markets and in the global marketplace.  USA Rice continues to advocate for the U.S. government to address India’s WTO domestic support violations through a dispute settlement case that would push India to curb their rice subsidies, prevent consolidation across world rice production, and increase the prices received by farmers.

In a related matter, last Friday, 12 Members of the U.S. House of Representatives sent a letter to President Biden reiterating a January 2022 ask to formally initiate a dispute settlement case against India's rice and wheat subsidies.