Nigeria, 59 Others Seek New WTO Rules on Food Subsidy to Battle Inflation
Ndubuisi Francis in Abuja with agency reports
No fewer than 60 countries, including Nigeria are demanding new World Trade Organisation (WTO) rules on food subsidy to battle inflation.
Known as the G33 nations, they are pushing for changes to the WTO’s public stockholding rules to account for inflation and protect food security at a time of uncertainty due to the COVID-19 pandemic and the Ukraine-Russia war.
India, which runs the world’s largest universal distribution system for subsidised food grains has been pursuing the matter with the WTO and now with the backing of 59 other developing nations, the issue has gained greater political weight.
The G33 which includes India, China, Pakistan, Egypt, Indonesia among others, the African group and the African Caribbean and Pacific (ACP) group, has thrown its weight behind the proposal to WTO which says that a permanent solution for public stockholding should account for inflation and also be based on a recent reference price instead of an old one based on 1986-88 prices.
The Covid-19 pandemic created an opportunity for countries with similar economic challenges as India to come together and press for reforms in the WTO methodology of calculating the food subsidy cap. Besides the pandemic, the war in Ukraine has caused supply bottlenecks, holding up exports, creating shortages and driving up prices, fanning fears over food security.
Currently, the WTO mandates that, “a member country’s food subsidy bill should not breach 10 per cent of the value of production based on the base price of 1986-88.”
The G33 countries also proposed that export of food grain from public stocks be allowed for international food aid to vulnerable countries. The WTO so far does not allow export of commodities from public stocks as it distorts prices and affects other countries.
Last year, at an informal meeting of the G33, India’s Commerce and Industry Minister, Piyush Goyal, had said WTO rules in agriculture tilted in favour of developed countries.
Meanwhile, the Basel Committee on Banking Supervision (BCBS) has promised complete work on how much capital banks should hold in their books to cover crypto assets.
The BCBS is the primary global standard-setter for the prudential regulation of banks and provides a forum for regular cooperation on banking supervisory matters.
Its 45 members comprise central banks and bank supervisors from 28 jurisdictions.
The committee said the norms governing banks’ exposure to crypto assets would be completed this year, taking notice of recent market struggles as a reason to push ahead with the plan.
The global banking standard-setter had last year proposed rules requiring lenders to hold $1 in capital for each $1 of crypto held, triggering significant opposition from the likes of JPMorgan Chase (JPM) and Deutsche Bank (DB), two banks that viewed that as an overly arduous standard.
However, in a statement yesterday, the BCBS said: “The committee plans to publish another consultation paper over the coming month, with a view to finalising the prudential treatment around the end of this year.”
Since 2008, the Switzerland-based Basel Committee has steadily toughened banks’ capital requirements to avoid a repeat of the financial crisis.
Last June, the committee proposed that banks set aside enough capital to cover losses on any bitcoin holdings in full. Certain tokenised traditional assets and stablecoins could, however, come under existing capital rules and be treated like bonds, loans, deposits or commodities.
Earlier this month TerraUSD, a stablecoin tied to the US dollar, collapsed.
“Recent developments have further highlighted the importance of having a global minimum prudential framework to mitigate risks from cryptoassets.
“Building on the feedback received by external stakeholders, the Committee plans to publish another consultation paper over the coming month, with a view to finalising the prudential treatment around the end of this year,” BCBS said.
Countries which are members of Basel are committed to applying its agreed principles in their own national rules.
The committee also said it had agreed to a finalised set of principles for supervising climate-related financial risks at banks.