India to say no to WTO trade facilitation deal

To seek speedy & immediate talks on public food stockholding issue

India is preparing to veto the World Trade Organization’s (WTO) trade facilitation agreement, in a stubborn effort to seek a negotiating space for public stockholding in food grain and food subsidies.

If it does, it will be the only country in the entire WTO membership to stop the deal from getting implemented.

“The way things are moving, there is no way we can agree to the trade facilitation agreement being pushed by the developed nations at WTO within the prescribed deadline. Food security has always been India’s main concern and this time we are not going to concede,” a top-ranking official involved in the negotiations, who did not wish to be named, told Business Standard.

The issue of public stockholding and food security has domestic compulsions here as the issue is largely political. And, for a new government that came to power after winning a landslide victory, the issue of livelihood of its poor and marginal farmers is a political trump card.

TFA has a deadline of July 31, when all the 160 WTO member countries have to sign the agreement into a protocol, marking implementation of the first phase of the deal. It will come into force fully from 2015. TFA seeks to streamline border procedures, making it easier for merchandise goods to cross international borders, with substantial reduction in red tape and bureaucracy. It has the potential to induce $1 trillion into the global economy.

The deal was struck in Bali, Indonesia, during the ninth WTO ministerial conference in December. At that time, it was decided that as an interim measure, in respect of public stockholding for food security, developing countries would be protected from WTO disputes for non-compliance with the relevant provisions of the Agreement on Agriculture. This protection would be available till a permanent solution, the deadline for which was 2017. But India wants the talks to happen immediately.

TIED IN A NOUGHT

• Dec 7, ’13: WTO’s Bali Ministerial concludes; members agree to sign a TFA with the potential to give a $1-trn boost to the world economy
• Feb ’14: A deadline of July 31 is fixed for signing a TFA into a protocol and fully implementing it by July 2015 as part of the Post-Bali Work Programme
• Jul 3, ’14:  India vetoes TFA at the WTO Preparatory Committee Meeting in Geneva
• Jul 14, 2014: The G-33 coalition of developing countries agrees to support TFA in a “focused and serious” way for a permanent solution to public stockholding for food security purposes
• Jul 16, ’14: Leaders of BRICS nations say in the grouping’s Fortaleza Declaration they will look forward to implementation of TFA
• Jul 19, ’14: Commerce Minister Nirmala Sitharaman says it will be difficult to agree to TFA without a concrete assurance on the public stockholding programme for food security

If the July 31 deadline is passed, there are high chances that the Doha Development Agenda, for which Bali was seen as an early harvest package, will lose its relevance. This will be so especially because America, the European Union, Japan and China are all engaged in clinching mega trade pacts — Transatlantic Trade and Investment Partnership and Trans-Pacific Partnership — with stiffer standards.

Recently, Commerce & Industry Minister Nirmala Sitharaman had categorically said in an interview with the Financial Times that the government did not want to wait until 2017 to start negotiations for a permanent solution and that it wanted “quick, substantive movement” on the issue. Soon after, Commerce Secretary Rajeev Kher issued a statement saying until India got an assurance that WTO members were ready to discuss a permanent solution on public stockholding, it would be difficult for it to sign the protocol on TFA.

“Till we have an assurance and visible outcomes which convince developing countries that members will engage in negotiations with commitment to find a permanent solution on public stockholding and all other Bali deliverables, especially those for the LDCs, India will find it difficult to join the consensus on the protocol of amendment,” Kher was quoted as saying in a statement issued by the commerce & industry ministry.

The statement also refuted media reports, saying Kher had been misquoted as saying the government would not block the deal. WTO Director-General Roberto Azevêdo, had recently said in a speech: “Bali has created the opportunity to herald a new era in the WTO. But whether we take this opportunity is up to the members. It will be a question of political will.”

India is standing lonely in its demand for an intensive and expedited negotiation on food security. And, Indian industry “desperately” wanted TFA to go through, as that would help it reduce transaction cost for exports, said an industry representative who did not wish to be named.  However, in India, agreeing to a TFA without having an assurance on food security would prove “politically disastrous,” said another official.

Biswajit Dhar, professor, Centre for Economic Studies and Planning, Jawaharlal Nehru University, said: “India is not doing the right thing by going against the coalition. If TFA gets postponed because of India, it will be very hard for the government to get everyone back when it wants negotiations on food security.”

Critics have even suggested that India is doing this because it is not prepared to take on the requirements of TFA, with a relatively weak trade infrastructure.