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increase of msp and higher procurement--->it will incentivize local farmers to produce more than in the absence of it--->price distortion+concerns on exports+developed countries contends it falls under prohibited amber box subsidies
Because One: If India has to meet Bill proposals it has to purchase more Food material from producers at an incentive price through MSP. As a result it will either 1. decrease exports of food from indian exporters or 2. Increase international food prices many developed countries depend upon our exports. so it will increase their import bill.
Wto cheif saya that india's FSB is breaching Aggregate Measurement of Support (AMS) (AMS): An indicator of the amount of domestic support for agriculture. As used in the Uruguay Round Agreement on Agriculture, the AMS refers to a measure of the gap between domestic and world prices multiplied by the quantity supported, plus any other commodity-specific transfers. Internal or domestic support reduction commitments in the Uruguay Round Agreement on Agriculture(AoA) are expressed in terms of reductions total AMS covering all trade-distorting internal support measures for agriculture.
Acc. To AoA agreement only 10% subsidy of total production is allowed. After FSB this subsidy will increase more than the agreed level. Another concern is FSB may affect the global stock and commodity prices.
It will try to get a temporary relief. being a leader of G 33 and champion of developing nations + latin america (read anti-USA) support , it should be easy.
Also because Latin America is doing this big time. Point is that India (and China) is such an elephant (big size), that anything it does, the impact is huge, unlike what brazil does or what Argentina does. Its economic actions have high global impact, which is WTO is alarmed.
i have nothing to add beyond what eric, kd and sita have said. good question, @Anic21
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Comments
http://www.business-standard.com/article/economy-policy/food-security-ordinance-may-invoke-wto-compliance-issues-113072500351_1.html
http://www.thehindu.com/business/Economy/at-wto-india-will-face-price-catch/article4942468.ece
One: If India has to meet Bill proposals it has to purchase more Food material from producers at an incentive price through MSP. As a result it will either 1. decrease exports of food from indian exporters or 2. Increase international food prices
many developed countries depend upon our exports. so it will increase their import bill.
Two: India signed Agreement on Agriculture http://www.thehindu.com/business/Economy/at-wto-india-will-face-price-catch/article4942468.ece
(AMS): An indicator of the amount of domestic support for agriculture. As used in the Uruguay Round Agreement on Agriculture, the AMS refers to a measure of the gap between domestic and world prices multiplied by the quantity supported, plus any other commodity-specific transfers. Internal or domestic support reduction commitments in the Uruguay Round Agreement on Agriculture(AoA) are expressed in terms of reductions total AMS covering all trade-distorting internal support measures for agriculture.
Acc. To AoA agreement only 10% subsidy of total production is allowed. After FSB this subsidy will increase more than the agreed level.
Another concern is FSB may affect the global stock and commodity prices.
http://m.firstpost.com/economy/wto-is-very-worried-about-impactindias-food-billglobal-markets-1158983.html?page=1
What will be India's stand in upcoming WTO meet at Bali regarding same ?
@sita @Eric @KD123
Also because Latin America is doing this big time. Point is that India (and China) is such an elephant (big size), that anything it does, the impact is huge, unlike what brazil does or what Argentina does. Its economic actions have high global impact, which is WTO is alarmed.
i have nothing to add beyond what eric, kd and sita have said. good question, @Anic21