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

Battle for food security at Bali

BRP Bhaskar
Gulf Today

India goes into the ministerial meeting of the World Trade Organisation, beginning in the Indonesian island of Bali today (December 3), determined to fight to save its ambitious food security scheme from the subsidy limit imposed by an agreement with that body.

Under the WTO agreement on agriculture India is committed to keep the aggregate support under the food subsidy scheme to 10 per cent.

The Food Security Act, which came into force in September, provides for supply of five kilogrammes of grains a month to about 800 million people, classified as poor. WTO Director-General Roberto Azevedo, who was in India in October, said the measure would result in a breach of the 10 per cent cap and suggested that the issue be sorted out before the Bali meet.

India buys grains from farmers at minimum support prices for distribution to the poor. The developed countries consider this also as a form of subsidy.

India is not the only member which has problems with WTO’s rules relating to measures to help farmers and consumers. A coalition of similarly placed countries, styled as G33, was working together during the past one year to secure changes in the rules. It included China, Pakistan, Indonesia, Venezuela and several more from Africa and the Caribbean.

Intensive negotiations took place at Geneva to sort out the problems and come up with an agreed Bali package. Azevedo said last Tuesday they were very close to fully agreed texts but a final agreement could not be reached as “we stopped making the tough political calls”.

The following day the Least Developed Countries, most of them from Africa and the Caribbean, informed Azevedo that they had reached an agreement with the developed nations with regard to the text of the trade facilitation agreement and urged the other members to resolve the remaining issues which stand in the way of adoption of the Bali package.

The development encouraged Azevedo to declare he had not given up his efforts to secure a package and would continue his efforts to ensure a promising future for the multilateral trading system. However, it is not practical to hold substantive negotiations at the ministerial level as the WTO is a large body with 159 members.

The trade facilitation agreement aims at making world trade easier by simplifying and streamlining procedures. If it materialises, it will be the first major agreement in the WTO’s 19-year-old history. It is estimated to bring in gains worth $1 trillion in world trade.

To secure agreement to the Bali package, the developed world has offered India and other developing countries, as an interim measure, a “peace clause” which will give them four years’ time to comply with the norm of 10 per cent subsidy. Non-government organisations working among the poor and small farmers have asked the government to reject it.

While there are unofficial reports that the government is inclined to accept it, Commerce Minister Anand Sharma has asserted that what India is seeking is permanent immunity from farm subsidy breach. According to him, an interim solution is something that must hold good until a permanent solution is put in place.      

Before leaving for Bali, Sharma asserted that what India gives to its poor falls within “our right and that is insulated in its entirety from any multilateral negotiations or WTO negotiations.”

He added, “That is sovereign space and for India it is sacrosanct and non-negotiable.”

The WTO’s approach, determined largely by the developed nations that dominate it, is in conflict with that of the United Nations. In a report to the General Assembly last month UN Special Rapporteur on Right to Food Olivier de Schutter praised the efforts of governments across the world to adopt laws, policies and strategies to make access to food a basic right.

The WTO chief has been at pains to remind members that failure at Bali will have grave consequences. “We will fail not only the WTO and multilateralism,” he said. “We will also fail our constituencies at large, the business community and, above all, the most vulnerable among us.”

On their part, the WTO and the business community must recognise that the global order cannot be sustained for long by keeping large sections of the world’s population in poverty. India is home to one-third of the world’s poor and its responsibility to help boost the global economy cannot override its obligation to safeguard its poor. -- Gulf Today, Sharjah, December 3, 2013.

Good turn in India-Pakistan ties

BRP Bhaskar
Gulf Today

Three years after sea-borne terrorists created mayhem in Mumbai, relations between India and Pakistan are still far from normal but there have been some developments which augur well for the future.

An Indian army helicopter, which took off from Kargil in Jammu and Kashmir and strayed across the line of control in bad weather, was forced by the Pakistani military to land but it was returned within hours. This followed immediate hotline contacts between army officials of the two countries.

A retired Indian major general, in a letter to a newspaper, said the incident vindicated his “long-held view that the Pakistan army is a professional institution, not a rogue army as some sections of the media, service colleagues, and politicians would like to suggest.” The Associated Press of Pakistan quoted the Indian general’s remarks in a report circulated to domestic subscribers.

Kuldip Nayar, veteran journalist and campaigner for India-Pakistan amity, saw the speedy and happy resolution of the helicopter incident as a sign of lessening of cussedness in the relations between the two countries. He went on to ask why the two governments were postponing an overdue meeting of Home Secretaries which would accelerate the process of normalisation of relations thrown off the rails by the Mumbai terror attack.

India recently backed Pakistan’s candidature for a non-permanent seat in the United Nations Security Council, and Pakistan supported India’s bid to secure a second term for Commonwealth Secretary General Kamlesh Sharma. By far the most significant development with a bearing on the troubled ties between the two countries is the Pakistan government’s decision to accord India most favoured nation (MFN) status. India granted Pakistan MFN status way back in 1996. However, India was not among nearly 100 countries which were given MFN status by Pakistan.

When a country grants MFN status to another it undertakes to treat it on an equal footing with other countries with which it trades in keeping with the provisions of the World Trade Organisation agreement on non-discrimination. As a signatory to the South Asian Free Trade Agreement, Pakistan had an obligation to grant India MFN status but it declined to do so, linking improvement of trade relations to resolution of the Kashmir issue.

Pakistan allowed trade with India only in fewer than 2,000 items. India was resentful of Islamabad’s restrictive attitude which limited its access to the Pakistani market, South Asia’s second largest. The fact is that this attitude hurt Pakistan too.

India-Pakistan trade in the last financial year stood at $ 2.6 billion. At least thrice as much trade between the two countries is believed to have taken place through the United Arab Emirates and Singapore. In an article published in the journal of the Institute of Peace and Conflict Studies, New Delhi, two years ago, Nabiha Gul of Karachi University said it was possible to achieve a tenfold increase in bilateral trade.

Pakistan’s export trade is worth $ 21 billion and import trade is worth $ 32 billion. Its top partners in export trade are the US (16%), Afghanistan and the UAE (8% each), China (7%) and the UK (4%) and in import trade China (18%), Saudi Arabia and the UAE (11% each), Kuwait (6%) and the US (5%).

Pakistan’s belated decision to grant India MFN status is unlikely to lead to dramatic increases in trade. Pakistan could not increase its exports to India significantly during the last five years in spite of the MFN status that it enjoyed. India was able to double its exports to Pakistan during the same period without MFN status.

The decision to grant MFN status to India was taken at a meeting of the Pakistan Cabinet and announced by the Information Minister. However, an official release issued later made no mention of MFN status. It merely said the Cabinet had approved measures for normalisation of trade. An official spokesman explained later that grant of MFN status was part of the normalisation process.

The flipflop suggests some forces within the Pakistani establishment are not keen on progress on this front. Pakistani businessmen are also wary of liberalisation of trade as they feel they cannot compete with their Indian counterparts on an equal footing. The Indian authorities are endeavouring to allay their fears.

The Pakistan Peace Coalition, a civil society group, and the Pakistan Institute for Labour Education and Research supported the Cabinet decision. In a joint statement they described it as a major breakthrough towards trade liberalisation and a step towards increased prosperity in South Asia, which has a population of 1.8 billion.-- Gulf Today, Sharjah, November 7, 2011