Current Affairs 06 May 2023

CONTENTS

1. WTO to look at the issue of farm subsidies
2. Quad Grouping
3. Mercy Petition
4. Central Bank Digital Currency
5. Washington Declaration
6. Mukundra Hills Tiger Reserve

WTO To Look At The Issue of Farm Subsidies 

Context:

The finance minister of India has urged the World Trade Organisation (WTO) to look at the issue of farm subsidies with an open mind as it impacts the food security needs of emerging economies in the backdrop of COVID-19 pandemic and the Russia-Ukraine war.

Relevance:

GS III: Indian Economy

Dimensions of the Article:

1. World Trade Organization (WTO)
2. Subsidies under WTO
3. Need to relook into subsidy norms arises due to several reasons

World Trade Organization (WTO)

• The World Trade Organization (WTO) is an intergovernmental organization that is concerned with the regulation of international trade between nations.
• It is the largest international economic organization in the world.
• The headquarters of the World Trade Organization is in Geneva, Switzerland.
• The WTO deals with regulation of trade in goods, services and intellectual property between participating countries by providing a framework for negotiating trade agreements and a dispute resolution process aimed at enforcing participants’ adherence to WTO agreements, which are signed by representatives of member governments.
• The WTO prohibits discrimination between trading partners, but provides exceptions for environmental protection, national security, and other important goals.
• Trade-related disputes are resolved by independent judges at the WTO through a dispute resolution process.
• The WTO has 164 members (including European Union) and 23 observer governments (like Iran, Iraq, Bhutan, Libya etc.)
• India is a founder member of the 1947 GATT and its successor, the WTO.

Origin of WTO

• The WTO is the successor to the General Agreement on Tariffs and Trade (GATT), which was created in 1947.
• The Uruguay Round (1986-94) of the GATT led to the WTO’s creation. WTO began operations on 1st January, 1995.
• The Agreement Establishing the WTO, commonly known as the “Marrakesh Agreement”, was signed in Marrakesh, Morocco in 1994.

Functions of WTO

• Trade negotiations: The WTO agreements cover goods, services and intellectual property. They spell out the principles of liberalization, and the permitted exceptions. They set procedures for settling disputes.
• Implementation and monitoring: WTO agreements require governments to make their trade policies transparent by notifying the WTO about laws in force and measures adopted. Various WTO councils and committees seek to ensure that these requirements are being followed and that WTO agreements are being properly implemented.
• Dispute settlement: The WTO’s procedure for resolving trade quarrels under the Dispute Settlement Understanding is vital for enforcing the rules and therefore for ensuring that trade flows smoothly.
• Building trade capacity: WTO agreements contain special provision for developing countries, including longer time periods to implement agreements and commitments, measures to increase their trading opportunities, and support to help them build their trade capacity, to handle disputes and to implement technical standards.
• Outreach: The WTO maintains regular dialogue with non-governmental organizations, parliamentarians, other international organizations, the media and the general public on various aspects of the WTO and the ongoing Doha negotiations, with the aim of enhancing cooperation and increasing awareness of WTO activities.

Subsidies under WTO

Amber Box Subsidies:

• Distort international trade by making a country’s products cheaper in comparison to other countries.
• Examples include subsidies for inputs such as fertilizers, seeds, electricity, irrigation, and Minimum Support Price (MSP).
• Agriculture’s amber box includes all domestic support measures that are deemed to distort production and trade.
• WTO requires signatories to commit to reducing trade-distorting domestic supports in the amber box.
• Members who do not make commitments must keep their amber box support within 5-10% of the value of their production. (Di Minimus Clause)

Blue Box Subsidies:

• A conditional form of Amber Box subsidies.
• Placed in the Blue Box if it requires farmers to limit production.
• These subsidies aim to limit production by imposing production quotas or requiring farmers to set aside part of their land.
• Currently, there are no limits on spending on Blue Box subsidies.

Green Box Subsidies:

• Domestic support measures that do not cause trade distortion or cause minimal distortion.
• Government-funded subsidies without any price support to crops.
• Examples include environmental protection and regional development programs.
• Green Box subsidies are allowed without limits (except in certain circumstances).

Need to relook into subsidy norms arises due to several reasons

Unequal Weight in Trade Discussions:

• There has been a long-standing complaint that the viewpoints of the Global South and emerging markets have not been given equal weight as those of the developed nations in trade discussions.
• The export of agricultural goods has been a particularly contentious issue.

Frozen Subsidies for Developing Countries:

• The current reference price adopted under global trade norms has frozen subsidies for agriculture and poor farmers in developing countries.
• WTO members are not allowed to breach the 10% value of production limit based on the reference price of 1986-88.
• Subsidies for agriculture and poor farmers in developing countries were not counted at all.

Importance of Food and Fertilizer Security:

• The Covid-19 pandemic and Russia-Ukraine conflict have highlighted the importance of food and fertilizer security.
• Food security is stronger in developed nations due to unbalanced trade agreements.

Proposed Measures:

• India has proposed measures such as amendments in the formula to calculate the food subsidy cap.
• India has also proposed the inclusion of post-2013 programs under the Peace Clause to address the frozen subsidies issue.
  • The WTO’s Peace Clause is an interim mechanism agreed upon by its members in December 2013, aimed at dealing with the food stockpiling issue.
  • Under this clause, developing nations are allowed to breach the prescribed ceiling for food subsidies without facing any challenges at the dispute settlement forum of the WTO.
  • The Peace Clause will remain in effect until a permanent solution is found to the issue of food stockpiling.
• These measures aim to balance the interests of both developed and developing nations in global trade discussions.

-Source: The Hindu

Quad Grouping

Context:

Indian Australian Diaspora Foundation (IADF) is set to host a grand community reception in honour of Prime Minister Narendra Modi ahead of the QUAD Leaders’ Summit slated to take place in Sydney in May 2023.

Relevance:

GS II- International Relations

Dimensions of the Article:

1. About QUAD
2. What were the objectives of the grouping?
3. Quad Initiatives
4. What are the future plans of the Quad?

About QUAD

• The Quad is an informal strategic forum comprising four nations, namely –India, United States of America, Australia and Japan.
• One of the primary objectives of the Quad is, to work for a free, open, prosperous and inclusive Indo-Pacific region.
• The group for the first time met in 2007 on the side lines of the Association of Southeast Asian Nations (ASEAN).
• It is considered an alliance of maritime democracies.
• The forum is maintained through meetings, semi-regular summits, information exchanges, and military drills of all the member countries.
• The motive behind the Quad is, to keep the strategic sea routes in the Indo-Pacific, free of any military or political influence.
• The core objective of the Quad is, to secure a rules-based global order, freedom of navigation and, a liberal trading system.
• The coalition also aims to offer, alternative debt financing for nations in the Indo-Pacific region.

Purpose of Quad:

• Recently the U.S. has clarified that Quad is not a security or military partnership.
• Its purpose is to advance cooperation on key priorities in specific sectors that is consistent with international law
• It promotes shared values of its members and underpins peace and stability in the Indo-Pacific region.
• A U.S. State Department spokesperson said that “We work to support the rule of law, freedom of navigation and overflight, peaceful resolution of disputes, democratic values, and territorial integrity through open dialogue and information sharing on a diverse set of issue areas, including Maritime Security”.

Significance of Quad:

Quad is becoming a powerful mechanism and its significance is given below:

• Helping to vaccinate a big part of the world and getting a lot of vaccines out there,
• Strengthening maritime security to push back against aggression and coercion in the Indo-Pacific region,
• Working together on emerging technologies and making sure that they can be used in positive ways and an increasingly broad and deep agenda.
• It also supports many activities/platforms as part of its shared approach to the Indo-Pacific.

What were the objectives of the grouping?

• Coming together to foster a free and open Indo-Pacific formed the bedrock of cooperation.
•  Emphasis was laid on “rule of law, territorial integrity, freedom of navigation and overflight, peaceful resolution of disputes, and democratic values” in the region.
• The other areas of immediate focus were the pandemic through strengthening equitable vaccine access for the Indo-Pacific, combating climate change, sharing critical technologies, cyber security, supply chain resilience, and infrastructure and connectivity projects.
• Now it commits to promoting the free, open, rules-based order, rooted in international law and undaunted by coercion, to bolster security and prosperity in the Indo-Pacific and beyond.

Quad Initiatives:

• Quad leaders launched the Quad Vaccine Initiative (QVI) with the aim of manufacturing and distributing at least a billion COVID-19 vaccines for the Asia region by the end of 2022.
•  As for emerging technologies, the four countries aimed to work on the development and diversification of 5G telecommunications and the creation of supply chains for critical minerals and technologies for making semiconductors used in smartphones, another area where China is a leader.
• Quad nations had also agreed to build joint connectivity projects and transparent infrastructure funding for countries in the region.
  • The emphasis on connectivity saw the Quad challenge China in another sphere: a coordinated effort to provide financing and sustainable alternatives to China’s Belt and Road Initiative (BRI), which has led many nations to take loans and accept infrastructure bids from Beijing.
• The Quad also created a working group for combating climate change which would oversee efforts to foster green shipping by decarbonising maritime supply chains and promoting the use of clean hydrogen.

What are the future plans of the Quad?

• The Leaders will review the progress of Quad initiatives and Working Groups, identify new areas of cooperation and provide strategic guidance and vision for future collaboration.
• The Quad summit is expected to discuss the Russian war in Ukraine, and the impact of three months of Western sanctions.
• US also unveiled the ‘Indo-Pacific Economic Framework’ (IPEF) which is a programme to bind countries in the region more closely through common standards.
• Quad members also launched a maritime monitoring plan to curb illegal fishing in the Indo-Pacific.

-Source: The Hindu

Mercy Petition

Context:

In a recent ruling, the Supreme Court (SC) has declined to direct the government to commute the death penalty of Balwant Singh Rajoana, instead, it has allowed the government to decide on the Mercy Petition when necessary.

• Balwant Singh Rajoana was convicted for the assassination of former Punjab Chief Minister Beant Singh in 1995.

Relevance:

GS II: Polity and Governance

Dimensions of the Article:

1. About Mercy Petition
2. Making a Mercy Petition in India
3. Constitutional Framework
4. Important Judgments Related to Mercy Petition

About Mercy Petition

• A mercy petition is a formal request made by someone who has been sentenced to death or imprisonment, seeking mercy from the President or Governor.

Importance:

• Everyone has the fundamental right to live, as mentioned under Article 21 of the Indian Constitution.
• Mercy petitions are followed in many countries such as the United States of America, United Kingdom, Canada, and India.

Making a Mercy Petition in India

The process of making a Mercy Petition in India involves the following steps:

• No statutory written procedure for dealing with mercy petitions exists.
• After exhausting all reliefs in the court of law, either the convict or his relative may submit a written petition to the President.
• The President’s secretariat receives the petitions on behalf of the President.
• The petitions are then forwarded to the Ministry of Home Affairs for their comments and recommendations.

Grounds for Filing a Mercy Petition

The act of mercy is not the right of the prisoner, but a clemency granted by the President or Governor. The grounds for filing a Mercy Petition include:

• Health, physical, or mental fitness of the prisoner.
• The financial conditions of the prisoner’s family, including whether the prisoner is the sole earner.

Constitutional Framework:

• In India, mercy petition to the President is the last constitutional resort a convict can take when sentenced by a court of law.
• A convict can present a mercy petition to the President of India under Article 72 of the Constitution of India.
• Power to grant pardon is conferred upon the Governors of States under Article 161 of the Constitution of India.

Article 72:

• The President has the power to grant pardons, reprieves, respites, or remissions of punishment or to suspend, remit or commute the sentence of any person convicted of any offense.
• This applies in cases where the punishment or sentence is by a Court Martial, for an offense against any law relating to a matter to which the executive power of the Union extends, and in cases where the sentence is a sentence of death.

Article 161:

• It provides that the Governor of a State shall have the power to grant pardons, reprieves, respites or remissions of punishment or to suspend, remit or commute the sentence of any person convicted of any offense against any law relating to a matter to which the executive power of the State extends.
• Recent Development:
• The Supreme Court of India held in 2021 that the Governor of a State can pardon prisoners, including death row ones, even before they have served a minimum of 14 years of prison sentence.

Important Judgments Related to Mercy Petition

Maru Ram v. Union of India (1981):

• The Supreme Court held that the power to grant pardon under Article 72 is to be exercised on the advice of the Council of ministers.

Dhananjoy Chatterjee State of West Bengal (1994):

• The Supreme Court said that the power under Articles 72 and 161 of the Constitution can be exercised by the Central and State Governments, not by the President or Governor on their own.

Kehar Singh v. Union of India (1989):

• The Supreme Court had examined the scope of the President’s pardoning power under Article 72 in detail.
• The Court held that the exercise of the pardoning power vested in him under Article 72, could scrutinize the evidence on the record of the criminal case and come to a different conclusion from that recorded by the Court in regard to guilt of and sentence imposed on the accused.

-Source: The Hindu

Central Bank Digital Currency

Context:

The Reserve Bank of India (RBI) Deputy Governor recently said that Central Bank Digital Currency (CBDC) platforms could bring about a substantive change in the sphere of cross-border payments.

Relevance:

GS III: Indian Economy

Dimensions of the Article:

1. What is E-rupee?
2. What are the forms of CBDC?
3. What’s the model for issuance?
4. What are the advantages of e-rupee?
5. Can e-rupee be transacted in offline mode?

What is E-rupee?

• E-rupee is the same as a fiat currency and is exchangeable one-to-one with the fiat currency. 
• Only its form is different. It can be accepted as a medium of payment, legal tender and a safe store of value.
• The digital rupee would appear as liability on a central bank’s balance sheet.

What are the types of e-rupee?

Based on the usage and the functions performed by the digital rupee and considering the different levels of accessibility, CBDC can be demarcated into two broad categories —

Retail CBDC

• It is an electronic version of cash primarily meant for retail transactions.
• It will be potentially available for use by all — private sector, non-financial consumers and businesses — and can provide access to safe money for payment and settlement as it is a direct liability of the central bank.
• However, the RBI has not explained how e-rupee can be used in merchant transactions in the retail trade.

Wholesale CBDC

• It is designed for restricted access to select financial institutions.
• It has the potential to transform the settlement systems for financial transactions undertaken by banks in the government securities (G-Sec) segment, inter-bank market and capital market more efficiently and securely in terms of operational costs, use of collateral and liquidity management.

What are the forms of CBDC?

The central bank says e-rupee, or CBDC, can be structured as

Token-based CBDC

• It would be a bearer instrument like banknotes, meaning whosoever holds the tokens at a given point in time would be presumed to own them.
• In a token-based CBDC, the person receiving a token will verify that his ownership of the token is genuine.
• A token-based CBDC is viewed as a preferred mode for CBDC-R as it would be closer to physical cash.

Account-based system

• It would require maintenance of record of balances and transactions of all holders of the CBDC and indicate the ownership of the monetary balances.
• In this case, an intermediary will verify the identity of an account holder.
• This system can be considered for CBDC-W.

What’s the model for issuance?

There are two models for issuance and management of CBDCs under the RBI’s consideration —

Direct model (single tier model)

• The central bank will be responsible for managing all aspects of the digital rupee system such as issuance, account-keeping and transaction verification.

Indirect model (two-tier model).

• An indirect model would be one where the central bank and other intermediaries (banks and any other service providers), each play their respective role.
• In this model, the central bank will issue CBDC to consumers indirectly through intermediaries and any claim by consumers will be managed by the intermediary.

What are the advantages of e-rupee?

• Reduction in operational costs involved in physical cash management,
• It will foster financial inclusion,
• It will bring resilience, efficiency and innovation in the payments system.
• It will add efficiency to the settlement system and boost innovation in cross-border payments space and provide the public with uses that any private virtual currencies can provide, without the associated risks.

Can e-rupee be transacted in offline mode?

• The offline functionality as an option will allow CBDC to be transacted without the internet and thus enable access in regions with poor or no internet connectivity.
• It will also create digital footprints of the unbanked population in the financial system, which will facilitate the easy availability of credit to them.
• However, the RBI feels in the offline mode, the risk of ‘double-spending’ will exist because it will be technically possible to use a CBDC unit more than once without updating the common ledger of CBDC.
• But it can be mitigated to a larger extent by technical solutions and appropriate business rules including monetary limits on offline transactions.

-Source: Indian Express

Washington Declaration

Context:

The President of South Korea and the US President recently signed the Washington Declaration on the anniversary of 70 years of their bilateral relationship.

Relevance:

GS II: International Relations

Dimensions of the Article:

1. About Washington Declaration
2. Key Points

About Washington Declaration:

• The Washington Declaration was signed between the United States and South Korea to commemorate the 70th anniversary of their bilateral relations.
• Its purpose was to enhance cooperation towards nuclear deterrence and protect the Korean Peninsula from nuclear attacks.

Key Points:

• A US nuclear-armed ballistic missile submarine (SSBN) will be deployed in the Korean peninsula.
• A joint Nuclear Consultative Group will be formed to develop joint response tactics.
• The US will provide intelligence on nuclear advancements to South Korea.
• Joint military training programs and an annual intergovernmental simulation will be conducted to strengthen South Korea’s nuclear deterrence capabilities.
• The declaration reaffirms the non-proliferation Treaty, indicating that South Korea will not pursue independent nuclear capabilities but instead focus on deterrence measures through an alliance-based approach.
• The US President is the only “sole authority” authorized to use the US nuclear arsenal in the event of a nuclear confrontation.

-Source: The Hindu

Mukundra Hills Tiger Reserve

Context:

A nine-year-old full-term pregnant tigress suffering from severe constipation recently died at the Mukundra Hills Tiger Reserve (MHTR) during treatment.

Relevance:

GS III: Environment and Ecology

Dimensions of the Article:

1. About Mukundra Hills Tiger Reserve:
2. Vegetation
3. Fauna

About Mukundra Hills Tiger Reserve:

• Mukundra Hills Tiger Reserve, also known as Darrah Wildlife Sanctuary, is situated in Rajasthan, India.
• It is spread across 4 districts, namely Bundi, Kota, Jhalawar & Chittorgarh.
• The park is situated in a valley formed by two parallel mountains, Mukundra and Gargola.
• This tiger reserve was once a hunting preserve belonging to the Maharaja of Kota.
• The reserve includes three wildlife sanctuaries: Darrah wildlife sanctuary, Chambal wildlife sanctuary and Jaswant Sagar wildlife sanctuary.
• The Chambal River flows on the eastern bank of the reserve and is drained by its tributaries.

Vegetation:

• The vegetation in Mukundra Hills Tiger Reserve is mainly dry deciduous forest.
• The predominant species is Anogeissus pendula (Kala Dhok or Kaladhi) along with Khair (Acacia catechu), Ber (Zizyphus mauratiana), Kakan (Flacourtia indica), Raunj (Acacia lecofolia) etc.
• On higher slopes, Anogeissus pendula is replaced by Anogeissus latifolia along with Bel (Aegle marmelos), Salar (Boswellia sarata) Uum (Meliusa tomentosa) and Shisham (Dalbergia latifolia).

Fauna:

• The Mukundra Hills Tiger Reserve is home to various fauna species such as Leopard, Sloth bear, Nilgai, Chinkara, Spotted Deer, Small Indian Civet, Toddy Cat, Jackal, Hyena, Jungle Cat, and Common Langur.
• Reptiles and amphibians include Pythons, Rat Snake, Buff-striped keelbacks, Green keelback, crocodiles, Gharial, Otter, and Turtles.

-Source: The Hindu