The geneva fiasco

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India torpedoes WTO talks, developed world expresses dismay

India vetoed a trade facilitation agreement at WTO on Thursday as the 160-member body failed to move forward on food security issue, drawing gasps of disbelief from the international diplomatic community.

India said the talks cannot be interpreted to have failed on trade facilitation agreement (TFA) aimed at standardising global customs rules as it has now been only deferred till December to arrive at a permanent solution on food security issue as well at India’s insistence.

Though India is committed to the TFA, which has been virtually negotiated upon by the July 31 deadline, there was no forward movement on food security and public procurement issue due to which consensus could not be arrived at Geneva, a government official told reporters on Friday.

India had insisted that in exchange for signing the TF­A, it must see more progress on a parallel pact giving it more freedom to subsidise and stockpile food grains than is allowed by WTO rules. It got support from Cuba, Venezuela and Bolivia.

Following the stand-off, WTO director general Rob­erto Azevedo declared that the general council, which met in Geneva late Thursday, will now break for a month’s recess without an agreement on TFA and meet from September onwards to find a permanent solution to food security, which will be arri­v­ed as part of a single undertaking with TFA.

Azevedo also announced WTO will meet once every month till December in Geneva to thrash out a solution on food security, the official said. On food security and public procurement, India has been arguing that capping subsidy to 10 per cent of production should not be based on 1986-88 prices as at present, but should either be inflation indexed are based on current prices so that subsidy cap is realistic in tune with the times.

At the Bali ministerial, India ensured that public stockholding of food does not lose its spot in the way forward for the accord. It was adopted as one of the priority items of the long-drawn Doha Round. Trade facilitation (TF) and LDC (least developed country) concerns were the two others.

But the declaration said there would be a peace clause, which lays down that the existing arrangement on public procurement cannot be challenged at the WTO until the 11th ministerial in 2017 and a permanent solution is found. The word should have be “or” instead of “and” so that peace clause was available indefinitely till a solution was found.

Though India has interpreted the Bali declaration as availability of peace clause until a permanent solution is found, it is also interpreted by industrialised nations, as this window is available only for four years until 2017.

To clear this ambiguity, India has suggested at the WTO general council that a solution to the food security issue be negotiated upon by December failing which the peace clause should be available indefinitely.

Easing of global customs rules will result in additional $1 trillion trade that would benefit India immensely. Indian industry too has demanded it. This is expected to create 21 million new jobs. But along with it, making available cheap food to millions of poor cannot be thrown into the winds under the garb promoting trade.

Reacting to the development, US trade representative Michael Froman said America regrets that a handful of members have decided not to adhere to their commitment to implement the TFA consistent with the Bali agreement.

“The US has been fully committed to implement all elements of the Bali package, including the decision on food stockpiling, and has provided reassurances and clarifications, as requested,” Froman said.

“We have not been able to find a solution that would allow us to bridge that gap,” WTO director-general Robe­rto Azevedo told trade diplomats in Geneva just two hours before the final deadline for a deal.

US secretary of state John Kerry, on a visit to New Delhi, had earlier said he was hopeful that differences between India and much of the rest of the world could be resolved.

With India insisting on a peace clause for an indefinite period, analysts said this will act as a trigger at WTO in Geneva to find a permanent solution by December so that the peace clause does not become permanent. The peace clause ensures that no developing country will be challenged in WTO for exceeding subsidy beyond 10 per cent of production.

But Roberto Azevedo also told the meeting after the deal collapsed that “they’re (India) the ones with fewer options, who are at risk of being left behind. They’re the ones that may no longer have a seat at the table.”

“Failure to sign the TFA sent a confusing signal and undermined the very image prime minister Modi is trying to send about India,” a US state department official told reporters after Kerry’s meeting with prime minister Narendra Modi.

Several WTO member states voiced frustration at India. “Australia is deeply disappointed that it has not been possible to meet the deadline. This failure is a great blow to the confidence revived in Bali that the WTO can deliver negotiated outcomes,” Australian trade minister Andrew Robb said. “There are no winners from this outcome - least of all those in developing countries which would see the biggest gains,” he said.

An Australian trade official involved in the talks, who requested anonymity to speak more candidly, said officials were exhausted with the process. “Some see it as a final trigger for ending Doha and pressing ahead with plurilateral reform, leave behind those that don’t want to come along,” he said.

Some nations, including the US, the EU, Australia, Japan and Norway had discussed a plan to exclude India from the agreement and push ahead, officials involved in the talks said.

A Japanese official familiar with the situation said that while Tokyo reaffirmed its commitment to strengthening the multilateral trade system, it was frustrated that such a small group of countries had stymied an overwhelming consensus.

But New Zealand minister of overseas trade, Tim Groser, told Reuters there had been “too much drama” surrounding the negotiations and added that any talk of excluding India was “naïve” and counterproductive. “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.”

(With inputs from agencies)

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