U.S. Trade Representative Robert Lighthizer and Agriculture Secretary Sonny Perdue jointly announced this week that the United States on May 4 had submitted a counter-notification to the World Trade Organization’s (WTO) Committee on Agriculture citing “several areas of potential concern” with the information provided by India to the WTO on its market price supports for wheat and rice.
The administration said the action represented the first-ever notification to the Committee on Agriculture under the WTO Agreement on Agriculture regarding another country’s price support measures.
“The United States expects (its) trading partners to comply with the reporting requirements they agreed to when joining the WTO,” Lighthizer said. “Accurate reporting and improved transparency of these programs is an important step in ensuring that our trading partners are living up to their WTO commitments and helps achieve more market-based outcomes through the multilateral trading system.”
The U.S. notification to the WTO committee indicated that based upon American calculations, it appears India has underreported substantially its market price supports for wheat and rice. Among the areas of potential concern cited in the U.S. WTO notification are: 1) the quantity of production used in market price support calculations; 2) the exclusion of state-level bonuses from calculations of applied administered prices; 3) exclusion from India’s notifications of information on the total value of production of wheat and rice (information necessary to assess compliance with WTO commitments); and 4) issues related to currency conversions.
Perdue added that, “India represents a massive market, and we want greater access for U.S. products, but India must be transparent about (its) practices. For trade to be free and fair, all parties must abide by their WTO commitments.”
There are indications India’s domestic price support system has contributed to India dumping excess capacity from its significant public reserves of wheat and rice. Under its WTO commitments, India may provide subsidies equal to no more than 10 percent of the total value of its crop production. In the years covered in the counter notification to the WTO, the United States alleged that India’s own data indicate its price support levels appear to be the equivalent of 60 to 68 percent of the value of its wheat production and 74 to 84 percent of the value of its rice production.
The U.S. announcement said the United States expects the notification to be followed by a “robust discussion on how India implements and notifies its policies” at the next meeting of the WTO Committee on Agriculture, which is scheduled for June.
Meanwhile, in its Global Agricultural Information Network (GAIN) Report dated May 2, USDA’s Foreign Agricultural Service (FAS) increased its estimate of India’s 2018/19 wheat production by 1 million metric tons – to 95 million metric tons – based upon early harvest reports indicating higher-than-expected yields in northern India. In the same report, FAS said the Indian government’s procurement of wheat through April 26 was estimated at 23.6 million metric tons, compared to 22 million metric tons during the corresponding period of 2017. FAS forecasts total public procurement of wheat to reach 33 million to 34 million metric tons. Meanwhile, FAS increased its estimate of India’s marketing year 2017/18 wheat ending stocks to 13.2 million metric tons, up from its previous estimate of 12.5 million metric tons. It estimated marketing year 2018/19 ending stocks at 11.3 million metric tons.
The GAIN report also contains estimates on the Indian government’s procurement of rice, as well as Indian rice export projections.