The adoption of a temporary peace clause would be tantamount to recognizing that subsidy programmes in India and other developing countries are contrary to global trade standards, so that the nation would leave a sedentary duck if a complaint were to be filed at a later date in the WTO or other international for a. It would also lead to India losing its biggest trading chip at future WTO meetings. Trade negotiators call Article 13 of the World Trade Organization agreement on agriculture in general a peace clause. Article 13 stipulates that a WTO member`s domestic support measures and export subsidies, which are legal under the provisions of the agriculture agreement, cannot be challenged by other WTO members for illegal acts, in accordance with the provisions of another WTO agreement. The agricultural agreement contains a peace clause or clause governing the application of other WTO agreements to agricultural subsidies (Article 13). The provisions stipulate that Green Box`s domestic support measures must not be subject to countervailing duties or other subsidy measures under the WTO Agreement on Subsidies and Countervailing Measures, nor can they be subject to measures based on non-violation or infringement of tariff concessions under the GATT. Other national support measures consistent with the provisions of the agreement on agriculture may be subject to countervailing duties, but members must exercise the necessary restraint during the investigation. To the extent that aid for certain products does not exceed the aid agreed during the 1992 marketing year, these measures are exempt from other subsidy or cancellation or depreciation measures. Export subsidies that comply with the agricultural agreement are, if necessary, covered by appropriate provisions. Although India had to advance its position at the WTO, it felt that it had gone too far not to allow the talks. It is estimated that the proposed Trade Facilitation Agreement (TFA) would have provided a $1 trillion boost to world trade by reducing transaction costs, streamlining international customs procedures and facilitating merchandise trade.
The peace clause protects a developing country`s food supply programmes from WTO members` actions in the event of exceeding subsidy caps. High subsidies are seen as distortions of world trade. The limited window of opportunity offered by Western powers to the peace clause was seen by India as insufficient assurance.