US, UK, EU & others question India at WTO over wheat, rice and onion export restrictions

By TCA Sharad Raghavan

Several countries have gone to the World Trade Organisation (WTO) questioning decisions taken by India in the past year or more, banning or restricting the export of wheat, rice, and onions. The questions include why India took these decisions, why the WTO was not informed of these decisions, and why member countries were not given adequate warning — in contravention of WTO rules.

Member countries not being alerted about the restrictions is an obvious fallout of the WTO not being informed.

The questions are to be taken up at an ongoing meeting of the WTO’s Committee on Agriculture,being held over Wednesday-Thursday, during which WTO member countries can raise agriculture-related questions to other members.

The list of questions, accessed by ThePrint, includes several basic requests for communication posed by Japan, Switzerland, Canada, the United Kingdom (UK), Australia, the European Union (EU), the United States (US), and New Zealand and aimed at India.

Most of the questions were requests for key clarifications such as why India had not informed the other WTO member of its decisions, when it would do so, how long these restrictions would be in place, and whether India had taken into account the impact of its decisions on importing nations before implementing them.

Other questions had to do with how much rice India considered was enough for domestic needs, and on what basis it exempted some countries from the export ban.

In May last year, India’s Directorate General of Foreign Trade (DGFT) issued a notification prohibiting the export of wheat till further notice. In July that year, the DGFT further restricted the export of wheat flour, saying it could only be done under the recommendation of an Inter-Ministerial Committee.

In September last year, the DGFT prohibited the export of broken rice, and in July this year, it extended the prohibition to the export of non-Basmati white rice.

Then, in August this year, the Central Board of Indirect Taxes and Customs (CBIC?)  imposed a 40 percent duty on the export of onions, and a 20 percent duty on the export of parboiled rice.

All the above restrictions continue to be in place, though the restriction on rice export has since been eased for some countries.

All of these decisions have been questioned at the WTO, with the most basic of the questions being why India has not yet formally notified the WTO of its decisions.

When contacted by ThePrint, the DGFT directed all queries to the Department of Commerce, reasoning that the DGFT only published the notifications and did not go into the strategy behind them or the modalities to be observed with the WTO.

The relevant Department of Commerce officials could not be contacted on the phone as they are attending the meeting of the Committee on Agriculture. ThePrint has also reached the officials over email. The report will be updated if a response is received.

India’s decision to ban the export of certain kinds of rice has been criticised around the world due to the spike in international prices caused by the decision. United Nations officials last week said the move could increase the risk of social unrest and political instability in Asia and Africa.

Prior to the export ban, India accounted for around 40 percent of global rice supplies, according to the US Department of Agriculture, which maintains a database of foodgrain exports by all major producers.

While the DGFT notification restricting the export of non-Basmati white rice did not provide a reason for the ban, the Ministry of Consumer Affairs, Food, and Public Distribution said it was to address rapidly rising food grain prices.

The Indian government had similarly said that the prohibition on wheat exports was to ensure adequate domestic supplies. No reason was forwarded for restrictions on onion exports.

Why was WTO not informed of the bans?

“Could India expand on the considerations which prevented it from providing this Committee [on Agriculture] with an advance written notice regarding its export prohibitions and restrictions for wheat, wheat flour, broken rice and non-basmati white rice,” Canada has asked.

Japan, Switzerland, the US, UK, and Australia went on to ask why this advance notice was not provided despite the WTO rules mandating it.

“Could India provide the reason behind why the required notification to the Committee on Agriculture has not been made before it instituted the export prohibition in accordance with Article 12 of the Agreement on Agriculture,” they asked. “Please indicate when this export prohibition will be notified.”

Article 12 of the Agreement on Agriculture under the WTO states that before any member country imposes an export prohibition or restriction, it must give notice in writing “as far in advance as practicable” to the Committee on Agriculture.

The notice is to include information regarding the nature and duration of the measures, and the country taking the actions must consult with other member countries that are likely to be significantly affected by the restrictions.

Article 12 also goes on to say that, before taking any such decisions, members should “give due consideration to the effects of such prohibition or restriction on importing members’ food security”, something several countries have asked India about.

“Could India explain how it has given due consideration to the effects of the measure on importing Members’ food security, as required in Article 12.1(a) of the Agreement on Agriculture,” Japan, Switzerland, Canada, the US, UK, and Australia asked.

Apart from these questions, New Zealand also raised a very basic query of its own: “How long will they (export restrictions) be in place and when will they be lifted?”

How much rice does India need?

The US, Canada, Japan and Australia pointed out that India’s order banning the export of non-Basmati white rice said that the ban was “to ensure adequate availability of non-basmati white rice in the Indian market and to allay the rise in prices in the domestic market”.

However, these countries also went on to say that media reports showed that India currently has “sufficient supplies to meet domestic demand”.

“The US Department of Agriculture in August 2023 estimated India’s rice production at 134 million tonnes and stocks at 36 million tonnes for 2023/2024,” they said. “Please describe what quantity of rice India considers to be ‘adequate availability of non-basmati white rice in the Indian market’.

They also asked what quantity of public stocks India considered adequate for domestic needs.

Exemptions to Singapore, Mauritius & Bhutan

Another line of questioning was the basis for India’s decision to exempt Singapore, Mauritius and Bhutan from the rice export restrictions, and the transparency behind such exemptions.

On 30 August, the DGFT issued a notification exempting Bhutan, Mauritius and Singapore from the export ban on non-basmati white rice, allowing these countries to import 79,000 MT, 14,000 MT and 50,000 MT, of grains respectively.

“Once a country has requested an exemption from India’s export ban on non-basmati white rice, how does India determine which country can benefit from a special permission/exemption,” the European Union asked. “How are maximum export quantities determined?”

“What considerations or factors does India take into account in examining a country’s request for an exemption,” it further asked. “Are these considerations or factors available to the public?”

To be fair, India’s notification on the restriction of non-Basmati white rice exports did have a provision that allowed the government to exempt countries on the basis of food security reasons, but it did not provide any additional details.

New Zealand, Japan, Switzerland, Canada, the US, and Australia also asked why the WTO was not informed about the decision to hike the export duty on onions, and whether India had taken into consideration what impact this decision would have on importing nations.

This article has been republished from The Print

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