G20 should adopt flexible trade policy in times of high prices

New Delhi (PTI) - India, the world's second-
largest producer of wheat and rice, has said free export of
agricultural commodities could affect the country's food
security at a time when global prices are high and urged G-20
nations to adopt flexibility in trade policy.
"Developing countries like India for whom free exports
can be detrimental to their food security during the times of
high global prices," Indian Agriculture Minister Sharad Pawar
said in the summary note circulated at the fist agriculture
ministers' meeting of G-20 held in Paris.
Instead of going for free trade, he further said, that
G-20 needs to have flexibility in export policy, just as is in
the case of import policy.
"Due to the spike in food prices and turbulence in
global food market, smooth flow of trade in food commodities
has been severely affected," he said.
As a result, the agri-trade policy needs to be seen in
the light of provisions contained in article XI of the General
Agreement on Tariffs and Trade (GATT), 1994 and article 12 of
Agreement on Agriculture, Pawar noted.
Agricultural products benefit from an important
exception to Article XI of GATT, which prohibits the use of
quotas, import or export licences, or similar measures related
to the import or export of goods.
"Obviously a country like India which has food self
sufficiency only at the margin, has to ensure that substantial
hikes in global food prices do not result in domestic shortage
due to export," the agriculture minister said.
India banned shipments of wheat in early 2007 and of
non-basmati rice in April 2008 to bolster domestic supplies
amid a global food crisis.
Since restrictions on exports affect food availability
in importing countries, there is a need "to evolve some policy
to balance the interest of exporting and importing countries
in such a situation," Pawar suggested.
India has opted for trade liberalisation that
integrates domestic prices with the trend in international
prices but offers protection against high volatility, he
added.
Pawar mentioned that Indian commodity derivative
markets weathered the recent global financial crisis far
better than many of its western counterparts, primarily due to
a stringent regulatory regime in the country to combat price
manipulation and excessive price volatility.
The recent G-20 meeting was held in the backdrop of
high global food prices since 2008. The members have agreed on
the common 'Action Plan' to reduce price volatility, mitigate
the impact on vulnerable countries and create a mechanism for
better global coordination.
India is expecting a record foodgrain output of 235.9
million tonnes in 2010-11.