India's share in global trade is now near the two per cent mark and, according to World Bank data, merchandise trade - that, is trade in goods alone - accounted for 42 per cent of our GDP in 2012. Add to that trade in services, and a clearer picture emerges on the importance of trade for the Indian economy. We have never been and cannot afford to be against trade facilitation per se. The upgradation of our physical infrastructure, large and efficient ports, modern banking and so on must be accompanied by greater transparency and simplification of Customs procedures - as well as other improvements to reduce transaction costs, through measures such as the lodging of documents at a single point.
India has more poor people than do all the Least Developed Countries of the world put together. For a country like India, subsistence farming is a livelihood issue.
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The government's decision to reopen the Bali package has nothing to do with whether we are in favour of the domestic food security bill or not. Assuming for a moment that the government wishes to undo the entire edifice of the food security architecture, the state will still require the ability to procure food for stockpiling for a rainy day.
For good reason, Anand Sharma inter alia told Parliament on December 17, 2013: "In accordance with the decision of the Cabinet, in my plenary statement, I made it clear that the issue of food security was non-negotiable for India as it directly relates to the livelihood concerns of millions of subsistence farmers and food security of the poor and vulnerable sections of the society. I underscored that an interim solution cannot be a temporary solution nor be terminated and must remain in place till such time that a negotiated permanent solution is in place. I also stated that without a satisfactory decision on food security, we considered the Bali Package as lacking in horizontal balance and would, therefore not be able to lend our support to it."
He went on then to make the following categorical statement: "...A few hours before the Conference was scheduled to end, a revised draft text was placed before the membership, which addressed our core concerns. It provides for an interim mechanism to be put in place and to negotiate for an agreement for a permanent solution for adoption by the 11th Ministerial Conference of the WTO. In the interim, until a permanent solution is found, Members will be protected against challenge in the WTO under the Agreement on Agriculture in respect of public stockholding programmes for food security purposes. It unambiguously stated that the interim solution shall continue until a permanent solution is found..."
Now, carefully consider what the Ministerial decision of December 11, 2013 on public stockholding for food security purposes actually says.
"In the interim, until a permanent solution is found, and provided that the conditions set out below are met, members shall refrain from challenging through the WTO Dispute Settlement Mechanism, compliance of a developing Member with its obligations under Articles 6.3 and 7.2 (b) of the Agreement on Agriculture (AoA) in relation to support provided for traditional staple food crops in pursuance of public stockholding programmes for food security purposes existing as of the date of this Decision…"
'Shall refrain' in WTO dispute settlement jurisprudence is only slightly better than 'a best endeavour' and decidedly weaker than a legal prohibition. And now it gets worse. Para 4 of the same decision dealing with anti-circumvention/safeguards says, "Any developing member seeking coverage of programmes under paragraph 2 shall ensure that stocks procured under such programmes do not distort trade or adversely affect the food security of other Members".
The less-than-certain cover provided by para 2 is completely nullified by the conditions set out in para 4, i.e., that such procurement prices will not distort trade. And the burden of proof will not be on the country making the allegation but on the developing country member (read India), which will now have its procurement price subjected to an allegation of distorting international trade, which will then be adjudicated by a WTO dispute panel.
The newly elected Modi government was faced with one of two choices. If the government had gone ahead and approved the deal, then, there would have been no motivation for the developed countries to find a permanent solution. Secondly, the deal was against the letter and spirit of the development agenda of the Doha Round: Letter, because of the single undertaking; and spirit, because development concerns were to be mainstreamed in negotiations!
If the lawyers in the commerce ministry had pointed this out to the previous minister, he would surely have thought twice before making the categorical statements of the kind which he made in Parliament on December 17, 2013. Words have meaning. The WTO sometimes looks like a talk shop. In the final analysis, however, it is a contractual framework of rights and obligations. An elected government cannot shirk responsibility on what was either a negotiating mistake or rank incompetence. Livelihood support to poor farmers cannot distort trade and be equated with the hundreds of billions of dollars of agricultural subsidies paid to rich farmers in the West.