India to work out food subsidy compromise language by Sept

Hindustan Times, August 03, 2014
There is a general expectation that, while the World Trade Organisation (WTO) vacations in August, Indian and United States negotiators will work out food subsidy compromise language by September.

“We should get some stronger language by then,” said Pradeep Mehta, trade specialist and head of advocacy group CUTS International.

India has two aces up its sleeve. One, the US Trade Representative’s (USTR’s) office is desperate to complete the trade facilitation agreement (TFA). The TFA is a personal goal of the US’s trade representative Michael Froman, according to diplomatic sources. Giving India the language it wants will be a small price for finishing what is almost the last major WTO agreement that Washington has any stake in.

Two, US President Barack Obama wants a productive summit with Prime Minister Narendra Modi in September. This means the White House will be pushing hard for the issue to be settled before the summit takes place.

“The USTR dislikes India intensely” and would not be averse to trade sanctions against India, said a state department source. However, Obama has other fish to fry with Modi and is expected to override Froman.

Indian officials say Modi “took the Americans to a higher level in his talks with US secretary of state] John Kerry” and made Washington see the WTO as an irritant that should not define a much larger relationship.

The nature of the compromise language is uncertain. A background briefing by the state department’s South Asia point person, Nisha Biswal, spoke of Modi wanting “some degree of simultaneity of having TFA and food security issues move forward together.” Indian officials also speak of negotiating a food security pact in lockstep with the finish of the TFA.

Countries like Japan and Australia have reportedly talked about going ahead with an agreement signed by everyone except India and its three supporters. But this would require a herculean diplomatic task to get the other 149 countries on board. It would also require the backing of the largest trading nations — the US and the European Union in particular. It would be much easier to get a food security compromise worked out.

The TFA debacle is not causing much sleep loss among trade experts. The history of international trade negotiations is one of endless delays and failed deadlines. The real WTO issue that India needs to focus on is growing disinterest in the WTO process by Western nations.

“The US and the European Union are only interested in the TFA and the environmental services agreement,” says T Vishwanathan, trade advisor for Apeejay-SLG. “Once they’ve pocketed them, they will bid the WTO goodbye.” Mehta agreed that “the TFA is the last thing the US wants from India at the WTO. We aren’t part of the environmental services agreement.”

The WTO, in other words, will find its 20-year old rule-book becoming reduced to a fossil. The future means of world trade will be decided in alternative fora like the Trans-Pacific Partnership which India does not even qualify to join.

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