India leads WTO bid to permit subsidies for food stockpiling

A worker takes a nap on sacks filled with wheat at a wholesale grain market at Dadri town in Uttar Pradesh May 26, 2012.

GENEVA (Reuters) - A coalition of 46 developing countries led by India has proposed changing World Trade Organization rules to lift the limit on subsidised food stockpiling to support poor farmers, according to trade diplomats and a document seen by Reuters on Wednesday.

The proposal by the so-called G33 group of countries, which includes China, Indonesia, Pakistan and Zimbabwe, revives an idea previously contained in the Doha Round of trade talks that collapsed last year.

"Significant progress has already been achieved in the Doha Round negotiations which recognize the serious concerns of food security in developing countries," said the proposal, which was circulated to WTO members on Tuesday.

"This has assumed the character of a global concern in the past few years with a need for urgent action."

Each of the 157 members of the WTO has to agree to limits on its trade-distorting subsidies, known as its "aggregate measure of support" (AMS), when it joins the global trade club.

The proposal would amend the WTO's Agreement on Agriculture to permit more exemptions to the limits on such subsidies.

"Acquisition of stocks of foodstuffs by developing country Members with the objective of supporting low-income or resource-poor producers shall not be required to be accounted for in the AMS," said the proposal, which will be debated at a closed door meeting on Friday.

Under the proposed changes, developing countries could pay farmers subsidised prices to stockpile their crops without having to account for the price subsidy as part of the AMS.

It was not clear how much support the proposal would have within the wider membership. Changes to the WTO rules normally need unanimous agreement and there has been very little meaningful reform for years, with many ideas getting bogged down in bargaining and counter-proposals.

The WTO's members have tried to put Doha's failure behind them and many are now in favour of hiving off the most "doable" parts of that negotiating round for rapid agreement, ensuring that at least part of the planned trade reforms go ahead.

The most favoured area for an agreement is so-called "trade facilitation", an effort to slash red-tape at customs and raise standards to help oil the wheels of global commerce.

But many developing countries have resisted the push for a quick win on trade facilitation, arguing it involves significant costs for them and insisting it must be balanced with other reforms that favour developing countries.

Several G33 trade diplomats denied that the agriculture proposal was intended as part of a wider deal, but another said it was.

"Trade facilitation is not balanced itself. We need to have something else," he said.

One of the G33 diplomats said the group was hoping the proposal would be accepted straight away and dismissed the suggestion that it could be a stalling tactic aimed at holding up a deal on trade facilitation.

"We're not looking at it that way," the diplomat said. (Editing by James Jukwey)