India sticks to stand as WTO talks collapse

Negotiators warn of consequences over India's refusal to agree to the deadline for wrapping up the trade facilitation agreement

Asit Ranjan Mishra
Updated1 Aug 2014
The talks remained deadlocked after New Delhi stuck to its stand that nations must simultaneously find a permanent solution to proposals on food security, which it says are the priority of poorer countries. Photo: AFP<br />
The talks remained deadlocked after New Delhi stuck to its stand that nations must simultaneously find a permanent solution to proposals on food security, which it says are the priority of poorer countries. Photo: AFP

New Delhi: A day after the collapse of efforts in Geneva to strike an eleventh-hour compromise to salvage the first deal in the 19-year history of the World Trade Organization (WTO), India stood firm on Friday, dismissing dire warnings by rich nations over the future of the multilateral forum.

At the same time, India also offered to help find a negotiated solution to its proposals on food security stockholdings that led to WTO’s failure to meet a 31 July deadline for wrapping up the trade facilitation agreement (TFA).

Negotiators in Geneva warned of consequences over India’s refusal to agree to the deadline that would have taken the TFA, aimed at simplifying customs procedures and cutting transaction costs, into the WTO rulebook.

The talks remained deadlocked after New Delhi stuck to its stand that nations must simultaneously find a permanent solution to proposals on food security, which it says are the priority of poorer countries.

On Friday a commerce ministry official in New Delhi said on condition of anonymity that India is prepared to re-engage in negotiations on “day one” after the summer break at Geneva with a clear understanding that its position on food security is firm and its commitment to trade facilitation is “100% firm”.

“We want trade facilitation and food security should both pass the muster together and we will work towards that. We look forward to receiving support from our other members and friends in the WTO. Given to ourselves, we are prepared to negotiate a permanent solution in September itself,” he said on condition of anonymity.

But WTO director-general Roberto Azevedo, in his address to the informal meeting of the trade negotiations committee on Thursday evening, said that missing the deadline for TFA would have likely repercussions in all areas of WTO’s work.

“My sense, in the light of the things I hear from you, is that this is not just another delay which can simply be ignored or accommodated into a new timetable—this will have consequences. And it seems to me, from what I hear in my conversations with you, that the consequences are likely to be significant,” he said.

Azevedo, however, left it to the member countries to decide what the consequences will be after WTO’s summer break.

Azevedo said that on the one side there is firm conviction, shared by many, that the decisions trade ministers reached at Bali, Indonesia, in December last year cannot be changed or amended in any way. On the other side of the debate, he said in a reference to India, “we have some who believe that those decisions leave unresolved concerns that need to be addressed in ways that, in the view of others, change the balance of what was agreed in Bali”.

India believes progress on TFA has been quicker than that over its proposal on food security—a departure from WTO’s practice of ‘single undertaking’, under which all parts of an agreement move together.

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 complain that the base year is outdated and that they need to be given leeway to stock enough grains for the food security of millions of their poor.

The TFA is meant to simplify customs procedures, facilitate the speedy release of goods from ports and cut transaction costs.

“The United States regrets that a handful of Members have decided not to adhere to their commitment to implement the TFA consistent with the Bali agreement,” said Michael Froman, US Trade Representative.

João Cravinho, the European Union ambassador to India, tweeted: “Deeply concerned about sinking of WTO deal which will have profoundly negative global consequences.”

While agencies reported that some countries have already discussed a plan to exclude India from the facilitation agreement and push ahead regardless, Indian officials dismissed the idea. “If a bunch of developed countries who anyway have world class trade infrastructure want to sign a deal among themselves, then good luck to them. The deal makes no sense without developing countries like India,” a second Indian trade ministry official said on condition of anonymity.

New Zealand minister of overseas trade, Tim Groser, told Reuters, “India is the second biggest country by population, a vital part of the world economy and will become even more important. The idea of excluding India is ridiculous.”

“I don’t want to be too critical of the Indians. We have to try and pull this together and at the end of the day putting India into a box would not be productive,” he added.

Anwarul Hoda, a former deputy director-general at WTO, said while India is right that the 31 July deadline was not sacrosanct and no violation has been made in legal terms, India’s move could be politically damaging. “If we don’t rush to save the Bali deal, the US will drag itself away from multilateral negotiations at the WTO and will focus on the regional trade agreements like TTP and TTIP (Trans-Pacific Partnership and Transatlantic Trade and Investment Partnership). That will not be in India’s interest,” he added.

Signs of a possible compromise emerged in New Delhi on Thursday after visiting US secretary of state John Kerry indicated a possible compromise on the issue of food security to address India’s concerns that would help break the stalemate.

But obviously, things did not work out in the green room discussions at WTO in Geneva.

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