Global trade through a domestic prism
India’s position on TFA is guided by a notion of food security that is a trifle past its sellby date. The food shortages and ‘ ship to mouth’ existence of the 1960s are a compelling memory.
One of the unforeseen consequences of Narendra Modi coming to power is that several commentators and analysts who were hitherto not identified with open trading systems have become fervent votaries of the World Trade Organisation ( WTO) and what it stands for. They are suddenly worried for the international trade framework and concerned Mr Modi and his government are about to destroy it. The reference is to India’s decision to block or delay the Trade Facilitation Agreement ( TFA) of WTO.
Aside from the opportunistic embracing of free trade practices by Mr Modi’s domestic critics — whose principal ideological motivation seems to be to oppose anything he does — how does one assess India’s position on TFA? It can be said the TFA deadline came too early in the government’s life, within weeks rather than months, and this prevented it from formulating a better response. It can be said the government and its key ministers should have explained the Indian position and Indian concerns, rather than simply retweeted official statements. It can be said this government was left with a time bomb by the previous government, though here, like in other cases, it has chosen not to publicly blame its predecessor.
All of this is true. It is also true that a rationalisation of food subsidies at home is something the Modi government is working towards anyway, and this would make it far more WTO and TFA compliant than is imagined. So why then did the government do what it did?
The answer lies in a pragmatic, even cynical understanding of statecraft, rather than op- editorial enthusiasm for “international norms” and the “global system”. Early on in its term, with hard decisions expected in the coming months on a host of issues, the National Democratic Alliance government saw no harm in a little grandstanding for the “rights of the Indian farmer”. This ensured it suffered no political criticism for supposedly succumbing to the big, bad West, which is precisely what the Congress would have accused it of had it signed on to TFA by July 31.
That apart, there was the belief — justified by precedent — that in international trade negotiations there are no real deadlines. The July 31 boundary for TFA could easily be pushed to a later date, say September or October. That is why governments of other countries, while expressing disappointment at India’s position, have not treated the Modi government’s action as irredeemable. Those dire predictions have been limited to sections of the media.
At the root of the Bharatiya Janata Partyled government’s response to the TFA issue lies a lesson that goes back to the United Progressive Alliance administration and to 2013. In January that year, two Indian soldiers were beheaded by Pakistani troops. There was an outcry when the bodies came home, and the familiar, if overdone, prime- time circus on television. An intelligent politician would have been mindful of public sentiment and excoriated Pakistan. That would have won him political space. Following this, he could have gradually brought down the temperature.
What did the Congressled government do? Salman Khrushid was then the external affairs minister. His first statement was he wouldn’t be “pressurised by wild calls for revenge” and the “peace process” would continue. To India, he seemed to be living on another planet. In the days to follow, rather than calm the public mood, the government was forced to play catch up. It ended up going to ridiculous extremes and even expelled a Pakistani women’s hockey team.
Later in the year, Chinese troops in the vicinity of Ladakh made incursions beyond what was normal. Once more there was domestic emotionalism. How did Mr Khurshid react? Both he and his Prime Minister sought to describe it as a “localised” problem. Mr Khurshid stressed India would not jeopardise other aspects of the Beijing- New Delhi relationship by focusing on Ladakh. He said he was “not here to satisfy people’s jingoism”.
It would have been so much better, and politically useful, for Mr Khurshid and his colleagues to have started with clear- cut and hard- hitting remarks. The nuance could have come later, when public ire and the Opposition’s assault had been addressed.
These examples provide insights into how domestically- rooted politicians tend to think, even when faced with a foreign policy or trade policy provocation. One needs to see the Modi government’s approach to TFA in this light. After all, international trade officials and diplomats, redoubtable trade economists and even some of the ebullient oped critics in South Delhi are not usually participative voters in Indian elections. Neither will they be around to defend Mr Modi and his government if the Opposition accuses it — unfairly or otherwise — of selling out.
Having said that, it has to be admitted India’s position on TFA is guided by a notion of food security that is a trifle past its sell- by date. The food shortages and “ship to mouth” existence of the 1960s are a compelling memory and need to be respected. Nevertheless in terms of scarcity of grains — as opposed to supply- side issues related to dairy products or pulses — they are perhaps not as relevant today.
Indeed, Indian policymakers can be accused of a degree of paranoia about foodgrain shortages. Dealing with this requires a management of domestic expectations and a degree of voter and farmer education. As things stand, however, India’s minimum support price mechanism has become as much of a political touch- me- not as Japan’s traditional opposition to rice imports. This is a reality Mr Modi needs to rectify, but to ask him to do it with a one- step, sledgehammer move would be to expect him to commit suicide.
What doesn’t help is uninformed criticism. As a sample take the August 3 edition of the New York Times’ recent series of joke editorials on India. It says India is stockpiling so much grain “that the country will inevitably end up dumping some of it onto the world market, which would depress global prices and hurt farmers in other countries”. This is just so bizarre. Who thinks up these things?