India sticks to tough stand on WTO deal, cabinet call today

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‘Won’t ratify the agreement if food security concerns not met’

Ahead of the cabinet meeting on Wednesday, commerce minister Nirmala Sitharaman met prime minister Narendra Modi giving credence to the possibility India blocking WTO’s trade facilitation agreement as New Delhi was being increasingly pushed to such a drastic action by industrialised nations dragging their feet on the vital food security issue.

Finance minister Arun Jaitley too attended the meeting on Tuesday afternoon. India has all along held it would not ratify a WTO trade facilitation agreement if developing countries concern on food security and public stock holding is not met. The trade facilitation agreement was to be signed by July 31 as decided at the WTO Bali ministerial last year. But these deadlines have no sanctity as several deadlines have been missed in the Doha round of trade negotiations, which began in 2001.

As a follow up to WTO Bali ministerial, discussions at Geneva in the recent months have focused more on trade facilitation at the behest of some advanced countries, but the other two issues, finding permanent solution to food security and issues pertaining to least developed countries, have been ignored. India and other developing countries maintain all the three should form part of single undertaking to be negotiated upon at Geneva as a follow up to Bali ministerial. India had repeatedly said progress in one area of interest to advanced nations is rapid, while the other of interest to developing nations are slow.

“India’s stand is clear. It will not move forward on trade facilitation agreement (TFA) in absence of a concrete framework to find a permanent solution on public food stockpile, which is necessary for the food security programme,” a government official said. India provides a comprehensive package of subsidies to farmers to encourage them to produce more as well as build food stocks for its public distribution system in which subsidised food grains are provided to the poor.

To take effect, the Bali pact on trade facilitation needs to be approved by all 160 WTO members. All agreements are through consensus and even if one country blocks, the agreement will not go through.

Though there is a belief that a section of Indian business community favoured TFA as it is argued by advance countries to boost global trade by $1 trillion and can generate around 20 million jobs across the world, the political class in India cannot be oblivious to the fact that 300 million poor in India needed support to meet their nutritional needs. There is also a view that $1 trillion gain is vastly exaggerated to cajole developing countries into agreeing to TFA.

A decision on whether to block TFA is widely expected to be taken by the cabinet on Wednesday. "We want the Bali package to be implemented, but in totality,” a government official said. Sitharaman articulated India’s stand clear at the meeting of trade officials of the Group of 20 industrial and developing nations in Australia last week.

Industry body Ficci however batted for TFA saying the agreement will lower transaction cost for exporters thereby boosting their competitiveness. "We certainly feel that through this agreement, we will be able to see a significant reduction in the transaction cost involved in trading across borders. This is good for both trade and enterprise in India and we expect the government to take a considered view on signing of this agreement.” Ficci president Sidharth Birla said.



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