UN­MASK­ING WTO

The fra­cas over In­dia's re­fusal to meet the dead­line on trade fa­cil­i­ta­tion ex­poses rich na­tions' dou­ble stan­dards

Down to Earth - - CONTENTS - LATHA JISHNU

In­dia's re­fusal to toe the line on trade fa­cil­i­ta­tion ex­poses rich na­tions' dou­ble stan­dards

NOTH­ING HAS ex­posed the dou­ble stan­dards at the World-Trade Or­gan­i­sa­tion (wto) than the cur­rent uproar over the im­ple­men­ta­tion of two agree­ments at the global trade polic­ing or­gan­i­sa­tion. One, termed Public Stock­hold­ing for Food Se­cu­rity Pur­poses, pro­tects the food se­cu­rity con­cerns of mil­lions of the poor and the liveli­hood of mil­lions of mar­ginal farm­ers in de­vel­op­ing coun­tries, in­clud­ing In­dia. The other, a Trade Fa­cil­i­ta­tion Agree­ment or tfa, re­lates to the im­prove­ment of ports and other trade in­fra­struc­ture such as cus­toms reg­u­la­tions that will al­low rich na­tions smoother ac­cess to mar­kets in de­vel­op­ing coun­tries (see 'What trade fa­cil­i­ta­tion im­plies' p16).

Both th­ese agree­ments were part of the pack­age ham­mered out in the In­done­sian resort of Bali in De­cem­ber 2013 by the ninth min­is­te­rial meet­ing of wto. In­dia’s re­fusal to back the tfa with­out vis­i­ble progress on the food is­sues has cre­ated an in­ter­na­tional uproar, with in­dus­tri­alised coun­tries par­tic­u­larly, the US ,por­tray­ing In­dia not just as a deal-breaker but as one who is jeop­ar­dis­ing the future of the wto. Adding to the hys­te­ria have been Western me­dia or­gan­i­sa­tions which have painted dire and far from truth­ful sce­nar­ios. A Reuters re­port quoted trade di­plo­mats in Geneva as terming In­dia’s po­si­tion as “hostage-tak­ing” and “sui­ci­dal”. It also ac­cused Delhi of block­ing what it de­scribed as “the first global trade re­form since wto was set up 19 years ago”. Noth­ing could be fur­ther from the facts.

To start with, In­dia has not re­neged on the tfa. It has said re­peat­edly that it is com­mit­ted to the tfa and there is no ques­tion of back­track­ing.For an­other,the re­fusal of In­dia and like-minded coun­tries—th­ese in­clude South Africa, Bo­livia, Cuba, Venezuela and Zim­babwe—has only re­sulted in a post­pone­ment of the pro­to­col of amend­ment that will in­cor­po­rate the tfa into the Mar­rakesh agree­ment that now gov­erns the wto. In­dia has only sought more time to back the tfa pro­to­col,which was sched­uled to be ap­proved by July 31, 2014. The ex­ten­sion sought is a mat­ter of mere months,till De­cem­ber 2014.

“Noth­ing is agreed un­til ev­ery­thing is agreed,” Min­is­ter of State for Com­merce Nir­mala Sithara­man was quoted as say­ing by Fi­nan­cial Times of Lon­don af­ter the wto Gen­eral Coun­cil meet­ing floun­dered on July 25.“What is so sacro­sanct about the July 31 dead­line (for trade fa­cil­i­ta­tion)? What you are do­ing now is to treat the trade fa­cil­i­ta­tion agree­ment as a stand-alone is­sue with­out any link to the rest of the is­sues. This can­not be treated as stand-alone. All is­sues will have to have equal rel­e­vance.”

Com­merce min­istry sources clar­i­fied that the other is­sues re­late to agri­cul­ture, food stock­hold­ing and the con­cerns of ldcs or the least de­vel­oped coun­tries.In­dia has sim­ply sought an in­sti­tu­tional frame­work to sort out th­ese is­sues and sug­gested a re­view around Oc­to­ber so that a per­ma­nent so­lu­tion is ar­rived at in De­cem­ber.

Some an­a­lysts are sur­prised by the bjp gov­ern­ment’s de­ci­sion to take the bull by the horns at this junc­ture. A Delhi-based trade econ­o­mist who closely fol­lows wto ne­go­ti­a­tions con­fesses that “it has come as a pleas­ant sur­prise”that In­dia has fi­nally had the gump­tion to stand up for the rights of the poor and “ex­pose the hypocrisy in­her­ent in the way the wto func­tions”.He says the for­mer upa gov­ern­ment did try to set right mat­ters at the Bali min­is­te­rial but caved in to pres­sure from the de­vel­oped coun­tries.“Anand Sharma (min­is­ter of com­merce in the pre­vi­ous Congress gov­ern­ment) went to Bali full of bravado but came back whipped since he was forced to agree to put off the sub­sidy ques­tion till 2017.” (see 'The Bali myth of $1 tril­lion trade gains', Down To Earth, Jan­uary 1-15,2014)

One the­ory do­ing the rounds in Delhi is that the tough stance was pushed by fi­nance min­is­ter Arun Jait­ley. In the wake of the Bali ac­cord, Jait­ley, then a Ra­jya Sabha mem­ber, had se­verely crit­i­cised the upa gov­ern­ment for ac­cept­ing “many open ended clauses that con­fer un­bri­dled pow­ers on all other wto mem­bers to scru­ti­nise, ques­tion and force us to right-size our food se­cu­rity pro­gramme.The pow­ers to de­cide what is right for the farm­ers

" Af­ter this (Bali) agree­ment, our food se­cu­rity pro­gramme has be­come more vul­ner­a­ble to in­ter­fer­ence by the WTO mem­ber coun­tries"

and the poor peo­ple of the coun­try would no longer re­side in the In­dian Par­lia­ment. It would be dic­tated by what the rest of the world per­ceives to be right.”

His prog­no­sis has proved right. Dur­ing the March 2014 meet­ings of the Com­mit­tee on Agri­cul­ture, just three months af­ter the Bali dec­la­ra­tion, In­dia was re­peat­edly ques­tioned about its food se­cu­rity pro­grammes that pro­vide sub­sidised rice and wheat to around 800 mil­lion of its pop­u­la­tion. Oth­ers in the 160-mem­ber or­gan­i­sa­tion have asked In­dia to cir­cu­late more up-to-date in­for­ma­tion on its do­mes­tic sup­port no­ti­fi­ca­tions. This, de­spite the fact that the Bali pack­age pro­vides for a two-year peace clause, mean­ing their sub­si­dies would not be chal­lenged at the wto dur­ing this pe­riod.

Trou­ble has been sim­mer­ing since then and Delhi has been re­peat­edly sig­nalling its dis­quiet over the progress on the Bali pack­age. It can hardly be ac­cused of in­dulging in brinkman­ship as the US has claimed it is. At the prepara­tory com­mit­tee meet­ing on trade fa­cil­i­ta­tion that opened on July 2,In­dia’s am­bas­sador to wto Anjali Prasad had once again drawn at­ten­tion to the lop­sided im­ple­men­ta­tion of the Bali pack­age, which was “heav­ily skewed in favour of trade fa­cil­i­ta­tion” while vir­tu­ally all other de­ci­sions had been swept aside. In ob­ser­va­tions that summed up the gen­eral per­cep­tion about the bi­ased func­tion­ing of wto, Prasad had said, “In round af­ter round,de­vel­op­ing coun­tries have been called upon to con­cede more and more with lit­tle of­fered in re­turn.”

The tfa is the lat­est case in point.While the de­vel­oped coun­tries are push­ing with all their diplo­matic might on tfa and of­fer­ing all kinds of fi­nan­cial in­duce­ments,dis­cus­sions on the ques­tion of public stock­hold­ing have not even com­menced de­spite re­peated re­quests by the Group of 33 de­vel­op­ing coun­tries,in­clud­ing In­dia, or G-33. In re­cent days, wto

Direc­tor-Gen­eral Roberto Azevêdo has out­lined an im­pres­sive num­ber of steps to roll out the tfa. “As you know, other in­sti­tu­tions are also get­ting en­gaged with,and ex­cited about, this work,”Azevêdo,who is chair of theTrade Ne­go­ti­a­tions Com­mit­tee,had en­thused at the meet­ing where he an­nounced that the World Bank, oecd, the club of rich na­tions, the In­ter­na­tional Trade Cen­tre, and the World Cus­toms Or­gan­i­sa­tion had come to­gether to fund and sup­port tfa im­ple­men­ta­tion.

Ac­cord­ing to Azevêdo,the ini­tia­tive was “con­ceived just a few weeks ago,”but he rolled out a fairly de­tailed pro­gramme of lend­ing and tech­ni­cal sup­port,stat­ing that “I think it’s clear we’re off to a great start.” The de­vel­oped coun­tries have been mak­ing a big pitch for tfa claim­ing that it would add an es­ti­mated $1 tril­lion to the world econ­omy as well as 21 mil­lion jobs,18 mil­lion of them in de­vel­op­ing coun­tries.The es­ti­mates do not have a sound ba­sis nor have they ex­plained how such a huge job cre­ation would come about.More im­por­tantly, th­ese es­ti­mates have not spelled what the tfa would cost de­vel­op­ing coun­tries,col­lec­tively or in­di­vid­u­ally.

It is not sur­pris­ing that In­dia’s mount­ing ex­as­per­a­tion with the cur­rent food sub­sidy rules has spilled over into a re­fusal to ac­cept the July 31 dead­line for the tfa pro­to­col. As Prasad said in a strongly-worded speech to the Gen­eral Coun­cil,the high­est de­ci­sion-mak­ing body of the wto af­ter the min­is­te­rial, for In­dia, the agree­ment on public stock­hold­ing for food se­cu­rity pur­poses takes pri­macy. “This is im­por­tant so that mil­lions of farm­ers and the poor families who de­pend on do­mes­tic food stocks do not have to live in con­stant fear. To jeop­ar­dise the food se­cu­rity of mil­lions at the al­tar of a mere anom­aly in the rules is un­ac­cept­able.”

In­dia’s prob­lem is that the skewed wto rules limit the value of food sub­si­dies to 10 per cent of the to­tal value of food grain pro­duc­tion. But the catch is that the sup­port is cal­cu­lated at prices that are over a quar­ter cen­tury old,as the G-33 has been com­plain­ing. The base year for cal­cu­lat­ing de min­imis sup­port is1986-88.Since then the prices have shot up 650 per cent, leav­ing de­vel­op­ing coun­tries with no flex­i­bil­ity to meet the food se­cu­rity of a hugely in­creased pop­u­la­tion.On the other hand,the world’s rich­est trade blocs, the US and the EU,are still giv­ing out bil­lions of dol­lars in farm sub­si­dies that they had com­mit­ted to do away with in the Doha Devel­op­ment Round. The US pro­vided $120.5 bil­lion in do­mes­tic food sup­port in 2010 be­cause the un­fair Agree­ment on Agri­cul­ture al­lows it to do so. In­dia’s food sub­sidy amounted to just $12 bil­lion.

As to the brouhaha over miss­ing the July 31 dead­line,trade pol­icy spe­cial­ists point out that the wto is no­to­ri­ous for miss­ing dead­lines.Since its in­cep­tion in Jan­uary 1995, the wto has missed crit­i­cal dead­lines, both those man­dated by min­is­te­rial con­fer­ences and oth­ers legally required un­der the Mar­rakesh Treaty.

South Africa, in its state­ment to the Gen­eral Coun­cil, tartly re­minded the US which has been harp­ing on the loss of cred­i­bil­ity of the wto be­cause of the July 31 miss that “re­peated fail­ure to de­liver mean­ing­ful out­comes on is­sues of in­ter­est to the poor­est mem­bers ... can equally be char­ac­terised as harm­ing the cred­i­bil­ity of our or­gan­i­sa­tion”.

The most egre­gious ex­am­ple of this is the missed com­mit­ments in the Doha Devel­op­ment Round,talks on which started in 2001 and were to have been con­cluded in 2005. In con­trast the tfa looks like a mi­nor blip on the trade ne­go­ti­a­tions front.

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