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05 August, 2014

Trade not at cost of the poor

BRP Bhaskar
The Gulf Today

India’s refusal to endorse the Trade Facilitation Agreement, concluded at the ministerial meeting of the World Trade Organisation held at Bali, Indonesia, last December, has put the measure on hold.

July 31 was the date by which members were required to give the final nod to put it on the WTO rulebook. India withheld its consent since the negotiations at Geneva did not yield a solution to its demand for protection of its food security law.

At WTO, decisions are taken by consensus, and TFA will not go into effect until India also consents.

Two US ministers, Secretary of State John Kerry and Commerce Secretary Penny Pritzker, who were in New Delhi ahead of the July 31 deadline, pressed the Indian government to fall in line. They assumed that Prime Minister Narendra Modi, who is keen on economic development, could be brought around.

Kerry told Modi that not allowing the Bali agreement went against his message to the world that India was open to business. Modi told him his first responsibility was to the poorest people of India. He believed TFA was good for India but he also believed the needs of those living on the margins of society, not only in India but also elsewhere in the world, must be addressed.

Western leaders and media have unleashed a propaganda barrage to make it appear that India went back on the Bali agreement and this may be the beginning of the end of the WTO. This is a deliberate misrepresentation of the facts.

The WTO has been in existence for 19 years but it has not been able to conclude a single agreement so far to improve the trade regime. It has missed 27 deadlines on various issues, but has survived.

At the root of the conflict between India and the developed world is the provision in the WTO agreement on agriculture which requires the country to limit food subsidy to 10 per cent of the value of the produce, worked out on the basis of international prices of 1986-88. This poses a threat to the food security programme under which 800 million poor people receive subsidised grains.

A third of the world’s poor live in India. No government, whatever its political complexion, can afford to throw them to the tender mercies of the market.

In pre-Bali negotiations at Geneva, the developed countries had given India two years’ time to bring subsidies within the ceiling. To secure an agreement at Bali, they extended the grace period to four years. Now they are accusing India of going back on the Bali commitment.

India had not made any commitment of the kind alleged by the West. While accepting TFA in principle at Bali, Commerce Minister Anand Sharma said the four-year concession was only an interim solution. What India wanted, he asserted, was permanent immunity from farm subsidy breach. An interim solution should hold good until a permanent solution was in place, he added.

In the seven months since the Bali meet the developed countries made no effort to address the issue.

Failure to meet the July 31 deadline does not mean TFA is dead. When WTO delegates reassemble in Geneva next month after the summer break they can take up the issue again and hammer out a formula which meets India’s needs.

The TFA provides for streamlining of global customs procedures. Advocates of globalisation claim it will cut delays at ports, giving a $1 trillion boost to the world economy, and create 21 million jobs, mostly in developing countries.

WTO Director General Roberto Azevedo has described the TFA hold-up as a setback to multilateralism. According to him, rich nations have options to tide over the situation but poor nations will suffer. Trade experts say in the absence of a global mechanism more countries may go in for regional agreements.

The Western breast-beating is part of a scheme to go ahead with the TFA without India. At the instance of the International Chamber of Commerce, the US, the European Union, Australia, Japan, Canada and Norway recently discussed this possibility.

It is not an attractive option. For one, it means a growing economy and a market of 1.2 billion people will be outside the global regime. For another, India cannot be denied benefits flowing from the TFA, such as faster cargo movement, without hurting other nations in the process. --The Gulf Today, Sharjah, August 5, 2014

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