India won’t back WTO trade pact
India is holding out for its concerns on food security and public stockholding to be addressed by WTO
New Delhi: India has told the World Trade Organization (WTO) that it will not endorse a trade facilitation protocol by its deadline of 31 July unless its concerns on food security and public stockholding are addressed—a move that threatens to stymie a global trade deal.
In a telephone conversation with WTO director general Roberto Azevedo on Wednesday, India’s trade minister Nirmala Sitharaman communicated India’s stance, expressing disappointment that the Trade Facilitation Agreement (TFA) protocol is being put before the general council even after India expressed its reservations.
Sitharaman also spoke to South Africa’s trade minister Rob Davies, who supports India’s position on food security, to coordinate the stand of both countries at WTO, a person familiar with the development said, speaking on condition of anonymity.
India’s permanent representative to WTO, Anjali Prasad, told the preparatory committee on trade facilitation in Geneva on 3 July that the pace of implementation of the Bali decisions has been heavily skewed in favour of TFA, and decisions on other matters that were meant to have progressed together have been relegated to the background. “We are deeply concerned that the ministerial decision on public stockholding for food security purposes is getting sidelined," Prasad said.
“Till we have an assurance and visible outcomes which convince developing countries that members will engage in negotiations with commitment to finding a permanent solution on public stockholding and other Bali deliverables..., India will find it difficult to join the consensus on the protocol of amendment," she said.
India is the most prominent among a group of developing nations angry at rich countries for failing to address their concerns about a deal on trade facilitation—struck by WTO member states in Bali last year.
The deal was the first global trade pact reached by WTO and was hailed as restoring credibility to the group and reviving the Doha round of trade negotiations.
Proponents believe the deal could add $1 trillion to global gross domestic product and 21 million jobs.
A commerce ministry official, who asked not to be identified, said there is no change in India’s stand.
Anwarul Hoda, who has served as a deputy director general at WTO, said since India had agreed to the proposal at Bali, it should have supported the TFA in good faith. “But since India has taken a stand, now it will be interesting to see how many countries support it in the WTO general council meeting," he added.
The WTO general council, meeting on Thursday and Friday had been expected to approve the TFA protocol unanimously. Though WTO can push through the deal with a two-thirds majority, analysts say that is unlikely to happen at the multilateral body where decisions are usually taken on the basis of consensus.
Argentina and South Africa supported India’s stance on food security at the G-20 trade ministers meeting at Sydney on Saturday. Commerce ministry officials earlier said China had been sympathetic to India’s cause, although the country did not reveal its stance on TFA at the Brics (Brazil, Russia, India, China, South Africa) summit at Fortaleza in Brazil. Russia and Brazil said at the same summit that they support TFA.
The agreement 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.
TFA was scheduled to come into force by 31 July 2015 after the agreement was ratified by the governments of all member countries. It requires developing countries to build infrastructure for faster clearance of cross-border shipments. India had also taken on a binding commitment for expedited shipment for air cargo companies under the agreement. The Indian cabinet, which was expected to give its stamp of approval to India’s stand at WTO on Wednesday postponed the meeting to Thursday. Sitharaman, who is also a minister of state in charge of finance, also postponed a scheduled media briefing by a day, as she was held up in Parliament discussing the Union budget.
The Bali package was the first multilateral agreement reached by WTO since its formation in 1995. India played hardball in Bali, with then trade minister Anand Sharma insisting that the issue of food security was non-negotiable. Much of the discord was around a so-called peace clause on food security, proposing that developing countries could not be challenged if they breached an agreed 10% government subsidy cap on the value of production of foodgrains.
Developed countries were proposing to limit the period of the peace clause to four years. This was finally changed to mean a “temporary solution till a permanent solution is found".
Reuters contributed to this story.
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