WTO lives on

At Bali, conditional victory for Indian interests

The outcome of the ninth ministerial meeting of the World Trade Organisation (WTO) at Bali may have been hailed widely as a please-all deal, but its implications go far deeper than they appear. Of the two main issues on which the agreement has been reached - food security and trade facilitation - the former concerns chiefly developing countries where the poor need subsidised food and the latter is significant for all countries, rich or poor. Though India claims victory in securing some concessions on the food subsidy issue on which relies the fate of its recently enacted food security law, the true victors at Bali are the WTO, which gets its relevance restored, and multilateralism in international commerce, which was presumed virtually dead.

The fine print of the Bali text on food security leaves ample room for concern. The exemption to developing countries from the 10 per cent ceiling on subsidies involved in food procurement, stockholding and distribution is neither enduring nor unmitigated. It is only an interim measure till the subsidies tangle is finally resolved and this needs to be done before the 11th ministerial conference to be held four years from now. India will, therefore, have to bargain hard now to seek a review of the Uruguay Round's Agreement on Agriculture, which mooted 1986-88 prices as the base for calculating food and agricultural subsidies. Apart from this, the new deal makes this exemption conditional to notifying the actual level of such subsidies by the countries concerned. New Delhi stopped doing so way back in the mid-2000s. Also worrisome is the caveat that states that the interim provision concerning public stockholding programmes for food security would be applicable to the situation as it exists on the date of this decision. This, in other words, construes that if the government increased procurement prices or expanded its food reserves, it would run the risk of defaulting on this count. Another uneasy provision relates to a bar on the use of food grains from the public stocks in any manner that distorts global food trade. This can be interpreted to mean that such food grains cannot be exported - something India often does and is doing even at present.

The stipulations in the trade facilitation pact, on the other hand, seem welcome, though these will entail sweeping legislative and procedural changes in customs clearance of imported goods. However, adequate time and financial assistance are assured for these countries to do so. In any case, the benefits from the smooth cross-border flow of goods would outweigh the costs in the longer run. The WTO, as well as some independent studies, estimates the likely gains to the global economy from increased trade at between $960 billion and $1 trillion, mostly to developing countries. Indian industry is, therefore, rightly upbeat about this deal, hoping that it would save the exporters from the tough rules laid down in Europe for several Indian goods. New Delhi should implement the new norms forthwith; it had already begun moving in that direction in its foreign trade policy of 2009-14.