Public stockholding (PSH) for food security purposes continues to be a contentious issue in the WTO Agriculture negotiations. While contending positions are put forcefully in the negotiations, there is limited research on the use of the Peace Clause. Since the Bali Ministerial Conference agreed on the Peace Clause in 2013, only India, which is one of the major users of PSH programmes has taken recourse in the Peace Clause. The Peace Clause protects the users of PSH programmes from legal challenges that emanate from breaches of countries’ allowable domestic subsidy ceilings. The use of the Peace Clause by India has strengthened the need and urgency to finalize the Permanent Solution on PSH. Some developed countries have argued that there is no track record in the use of the Peace Clause. They have claimed that the limited use of the Peace Clause suggests lack of interest in public stockholding programmes. They have also maintained that the method of calculating domestic subsidies used by the proponents of PSH programmes is incorrect, given that it is based on eligible production. They propose that instead of eligible production, total production should be used, which results in higher domestic subsidies. This proposed method includes other elements, resulting in inflated trade distorting domestic subsidies. The aforementioned methodology suggests that developing countries provide more trade distorting domestic subsidies than what is notified to the WTO.

This Trade Report argues that although the AoA has put PSH programmes under trade distorting domestic subsides, these programmes should be accounted for differently. PSH programmes are designed to provide food security to poor resources farmers and communities. Therefore, counting PSH programmes under trade distorting domestic subsidies defeats the purpose of providing food security. Additionally, the recent use of the Peace Clause by India underscores the need and the urgency to finalize the permanent solution on PSH.

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