WTO deal: India refuses to back down on Trade Facilitation Agreement - Livemint

Indian ambassador Anjali Prasad says India is of the view that the Trade Facilitation Agreement must be implemented only as part of a single undertaking including the permanent solution on food security. Photo: AFP

Geneva: India has proposed postponing the 31 July deadline for adopting the Trade Facilitation Agreement (TFA) in the World Trade Organization (WTO) until the issue of public stockholding for food security is resolved, setting the stage for a bitter faceoff between developed and developing economies at the multilateral talks.

Simultaneously, India has put on the WTO table a road map for a permanent solution by December to the issue that’s crucial for developing countries.

India’s permanent representative to WTO, Anjali Prasad , spelled out India’s position at the general council meeting of WTO in Geneva on Friday. India is of the view that TFA must be implemented only as part of a single undertaking, including a permanent solution on food security, Prasad said.

The trade facilitation pact reached in Bali, Indonesia, last year is meant to simplify customs procedures, facilitate the speedy release of goods from ports and cut transaction costs—measures that could benefit rich nations more than developing countries such as India.

At the heart of the problem is a WTO rule that caps subsidies to farmers in developing countries at 10% of the total value of agricultural production, based on 1986-88 prices. Developing countries are complaining that the base year is now outdated and they need to be given leeway to stock enough foodgrains for food security of millions of their poor.

“The Bali outcomes were negotiated as a package and must be concluded as such. Timelines are important but we cannot afford to act in haste in the WTO ignoring the concerns expressed by members,” Prasad said.

Prasad said there were already proposals on the table—reiterated recently in a fresh submission by the Group of 33 (G-33) developing countries on agriculture in WTO—on the basis of which discussion can begin immediately.

Elaborating on the suggestions India made at WTO, a senior commerce ministry official said: “We are asking the WTO to establish an institutional framework to find a permanent solution on food stockholding, hold special sessions of the agricultural committee frequently towards this goal, review progress in October in a general council meeting and finally arrive at a permanent solution by December-end.” The official spoke on condition of anonymity.

The official said that on the basis of India’s proposal, agreements on trade facilitation, agriculture as well as on issues of concern to LDCs (least developed countries) will be finalized by December, which will be in line with the principle of a single undertaking.

“We are committed for the Bali package, not for the Bali trade facilitation agreement only,” the official said.

The Indian cabinet approved the stand taken by the commerce ministry in a meeting on Thursday, the official added.

In a statement in the lower house of Parliament on Friday, trade minister Nirmala Sitharaman said India had taken the stand that until there was an “assurance and visible outcomes” which convince developing countries that WTO members will engage in negotiations with a commitment to find a permanent solution on public stockholding and all other Bali decisions, especially those related to the LDCs, “India would find it difficult to join the consensus on the Protocol of Amendment”.

In Bali last year, after intense negotiations, India derived a promise from the developed countries that a permanent solution to the issue of public stockholding for food security will be found within four years and meanwhile, in a temporary arrangement, no country will drag the developing countries to dispute settlement forums in WTO if they breach the food subsidy limits.

India agreed to the TFA in return for the agreement on food security. While the then United Progressive Alliance government hailed it as a victory for developing countries, Bharatiya Janata Party leader and present finance minister Arun Jaitley had criticized the government for giving in to pressure from developed countries.

While developed countries are insisting that linking a permanent solution to food security with the TFA is unfair, developing countries like India are maintaining that they suspect developed countries will run away after they sign off on the TFA and will not be keen to come to the table for finding a solution to the food security issue.

Reuters reported that US ambassador Michael Punke warned in a speech to WTO on Friday that the Indian-led ultimatum to unravel the deal struck in Bali last December would end global trade reform efforts.

“Today, we are extremely discouraged that a small handful of members in this organization are ready to walk away from their commitments at Bali, to kill the Bali agreement, to kill the power of that good faith and goodwill we all shared, to flip the lights in this building back to dark,” Punke said.

The commerce ministry official cited above said that in the Bali package, nothing else was moving, while only the TFA is being put before the general council for adoption.

“Our stand is based on three principles of WTO—that development is at the core of the Doha round, everything to do with Doha round has to be completed as a single undertaking and that WTO functions on the basis of consensus. We are only showing them back their own rules,” the official added.

On the implications of missing the 31 July deadline for TFA, the commerce ministry official said many deadlines had been missed before in WTO. “Why they were worried about the deadline now? Why they were not worried about many deadlines missed for the Doha round?,” the official added.

The official said India is not reneging on any of its promises. “We are also interested in trade facilitation and have taken measures in the budget for all that developed countries want from us.”

The government has allocated large sums of money for development of ports and announced a single-window clearance mechanism for imports in the budget presented on 10 July, that will help it meet its commitments under the TFA, Mint reported on Wednesday

India’s position of insisting on a single undertaking is justified because that has been the practice in international trade negotiations since the Uruguay round of multilateral trade negotiations, said Manoj Pant , a professor of economics at Jawaharlal Nehru University.

“A reasonable way out could be a mix of recalculation of base prices as well as a special differential treatment for developing countries to bring down their subsidy levels, say, in the next 10 years,” he added.

Reuters contributed to this story.

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