PM IAS DEC 17 EDITORIAL

​​​​​​1. Wrong forum: The attempt to securitise the climate change agenda could have unintended consequences

GS 2: Important International Institutions

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Context: India on Monday voted against a draft resolution at the United Nations Security Council (UNSC) linking climate to security, saying it was an attempt to shift climate talks from the United Nations Framework Convention on Climate Change (UNFCCC) to the Security Council and a “step backward” for collective action on the issue.

2. The Issue here: It is viewed that the Climate change may have exacerbated conflicts in the Sahel region and across Africa. But “viewing conflicts through the prism of climate change” was “misleading” and an oversimplification that could worsen conflicts rather than resolving them.
3. The Veto: The resolution, piloted by Ireland and Niger and which had the support of a majority of the UNSC members, was voted down by India and Russia — it has veto powers — while China abstained.
4. Previous attempts in this regard: Germany had circulated a similar draft last year which was never put to vote in the Security Council as the Trump administration opposed it. Now, with support from the Biden administration, the developed world is pushing to include what they call “climate security” in the agenda of the UNSC.

About the Resolution:

5. Niger, which holds the UNSC presidency for December, organised a debate on December 9 titled ‘Maintenance of international peace and security: security in the context of terrorism and climate change.’
6. One of the objectives of the debate was to examine how terrorism and security risks could be linked to climate change, as per a concept note circulated by Niger.
7. Arguments put forward by its supporters: climate change is creating security risks in the world, which will exacerbate in the future with water shortage, migration and a destruction of livelihoods.

India’s Contention:

8. Undermining progress under UNFCCC: The draft resolution would undermine progress made at Glasgow, where the latest round of talks under the UNFCCC, the 26th Conference of the Parties (COP26), concluded in November, as per Ambassador to the U.N. T.S. Tirumurti.
   • “What is it that we can collectively do under this draft resolution that we cannot achieve under the UNFCCC process?” India’s Permanent Representative said.
9. No decision must be taken without consensus: The reason countries were attempting to bring climate talks to the Security Council was that decisions could be taken without consensus or the involvement of most developing countries.  Each nation faces different challenges in transitioning into a greener economy.
   • “If the Security Council indeed takes over the responsibility on this issue, a few states will then have a free hand in deciding on all climate-related issues. This is clearly neither desirable nor acceptable,” he said.
10. Uphold Common but differentiated responsibilities(C&DR): Developing and ‘least developed’ countries had worked, over the last two decades, to make “common but differentiated” responsibilities a fundamental tenet of climate action.
    • The developed countries had not met their promises with regard to climate action and called for these countries to provide $1 trillion in climate finance “at the earliest.”
11. Outside the ambit of UNSC: the UNSC’s primary responsibility is “maintenance of international peace and security” and climate change-related issues are outside its ambit.
12. It would bring more power to the Industrialized world: Bringing the issue under the UNSC will also give more powers to the world’s industrialised countries, which hold a veto power, to decide on future action on climate-related security issues.

About UNFCCC:

13. Currently, all matters related to climate change are being discussed in the UN Framework Convention on Climate Change (UNFCCC), a specialised agency.
14. Membership: It has over 190 members
15. Progress under it till now: It is this process that led to the Kyoto Protocol, the Paris Agreement and the recent COP26 summit, and has put in place an international approach to combat global climate change.
16. But it is slow: there has to be faster collective action to tackle climate change and associated challenges.

Conclusion: This needs to be a collective process and the best way is through the UNFCCC, where decisions made are by consensus. The UNFCCC should not only make sure that the promises made by member countries, especially the powerful ones, in previous conferences are kept but also expand the scope of discussions to include climate-related security issues.

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2. The WTO’s challenge to MSP is another frontier to cross; The need is to convince farmers of other effective policy interventions that are World Trade Organization compatible.

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Context: The demand of farmers to provide a legal guarantee for the minimum support price (MSP) for their produce has triggered a nationwide debate.

Major contentions against Statutory guaranty of MSP:

• Fiscal Prudence: Some believe it would be “fiscally ruinous” to procure all the 23 crops for which MSP is announced annually.
• Logistically impossible: procuring these crops would be a logistical nightmare.
• Violation of WTO Norms: India cannot provide a legal guarantee for MSP without violating its international law obligations enshrined in the Agreement on Agriculture (AoA) of the World Trade Organization (WTO).
• Inflationary: As the farm produce would be procured at a higher than market price.
• Crowding out private investment: There would be no market to function for the private traders and investors. This would negatively impact the value addition/food processing industry in India.

Norms under WTO

• Mandate of Agreement on Agriculture: One of the central objectives of the AoA is to cut trade-distorting domestic support that WTO member countries provide to agriculture.
• Mechanism followed: the domestic subsidies are divided into three categories:
  • ‘green box’ measures: Contain non-market distorting subsidies like income support to farmers de-coupled from production.
  • ‘blue box’ measures: Subsidies that limit production by means of assigning quotas or other mechanisms like direct payments under production limiting programmes subject to certain conditions.
  • ‘amber box’ measures: are considered non-trade distorting. It includes the price support provided in the form of procurement of crops at MSP. It is subject to certain limits.
• The Aggregate Measurement of Support (AMS) system: To measure ‘amber box’ support, WTO member countries are required to compute  AMS. It is the total of product-specific support (price support to a particular crop) and non-product-specific support (fertilizer subsidy).
  • Under Article 6.4(b) of the AoA, developing countries such as India are allowed to provide a minimal level of product and non-product domestic subsidy.
  • This ‘de minimis limit’ is capped at 10% of the total value of production of the product, in case of a product-specific subsidy; and at 10% of the total value of a country’s agricultural production, in case of non-product subsidy.
  • Subsidies breaching the de minimis cap are trade-distorting. Consequently, they have to be accounted for in the AMS.
• Case with MSP: The procurement at MSP, after comparing it with the fixed external reference price (ERP) — an average price based on the base years 1986-88 — has to be included in AMS.
  • Since the fixed ERP has not been revised in the last several decades at the WTO, the difference between the MSP and fixed ERP has widened enormously due to inflation.
  • For instance, according to the Centre for WTO Studies, India’s ERP for rice, in 1986-88, was $262.51/tonne and the MSP was less than this. However, India’s applied administered price for rice in 2015-16 stood at $323.06/tonne, much more than the 1986-88 ERP.
  • When this difference is accounted for in the AMS, the possibility of overshooting the de minimis limit becomes real.
  • Procuring all the 23 crops at MSP, as against the current practice of procuring largely rice and wheat, will result in India breaching the de minimis limit making it vulnerable to a legal challenge at the WTO.
• Even if the Government does not procure directly but mandates private parties to acquire at a price determined by the Government, as it happens in the case of sugarcane, the de minimis limit of 10% applies.
  • Very recently, a WTO panel in the case, India – Measures Concerning Sugar and Sugarcane, concluded that India breached the de minimis limit in the case of sugarcane by offering guaranteed prices paid by sugar mills to sugarcane farmers.

Peace clause:

• Contention between developed and Developing nations: The AoA needs to be amended so that it provides adequate policy space to run an MSP-backed food security programme. Although a permanent solution is nowhere in sight, the countries have agreed to a peace clause.
• The peace clause forbids bringing legal challenges against price support-based procurement for food security purposes even if it breaches the limit on domestic support.
• However, the peace clause is subject to several conditions.
  • It can be availed by developing countries for the support provided to traditional staple food crops to pursue public stockholding programmes for food security (procuring food to provide free ration through the Public Distribution System).
    • Can’t apply to non-PDS crops: India will not be able to employ the peace clause to defend procuring those crops that are not part of the food security programme (such as cotton, groundnut, sunflower seed).
  • It is applicable only for programmes that were existing as of the date of the decision and are consistent with other requirements. 

1. 1. Countries are also under an obligation to notify the WTO if their subsidies exceed the permissible level. For instance, earlier this year, India reported to the WTO that it gave subsidies worth $6.31 billion for rice in 2019-20 while the value of rice production was $46.07 billion. In other words, the subsidies were 13.6% of the total value of production as against the de minimis level of 10%.

Way Forward:

• Therefore, India needs to recalibrate its agricultural support programmes to make use of the flexibilities available in the AoA.
• Towards Income based support: India can move away from price-based support in the form of MSP to income-based support, which will not be trade-distorting under the AoA provided the income support is not linked to production.
• Engagement with farmers: The Government needs to engage with the farmers and create an affable environment to convince them of other effective policy interventions, beyond MSP, that are fiscally prudent and WTO compatible

SOURCE: https://www.thehindu.com/

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