WTO deal stalled by trade facilitation row

Livemint, November 28, 2013
By Asit Ranjan Mishra

Draft text shows lack of consensus was not on section that deals with food stockholding and subsidies

Contrary to the perception that a dispute over an Indian proposal for food stockholdings and subsidies led to a collapse in talks at the World Trade Organization (WTO) in Geneva for a global trade deal at Bali, it is lack of consensus on the issue of trade facilitation which stalled a final agreement, according to the final draft text for Bali. The 62-page draft text prepared for the 9th ministerial meeting of the WTO at Bali, Indonesia, starting 3 December, shows that the section on public stockholding for food security purposes does not contain any square brackets. These brackets are a sign of lack of consensus among member countries. Words, phrases and sentences in square brackets signify that they are still under discussion.

At the same time, the trade facilitation section has many square brackets in the run-up to the Bali meeting, where countries are aiming to agree on the rules of world trade—a process known as the Doha Round of talks that began in 2001 but remains deadlocked.

India has been pressing the WTO to find a permanent solution to a dispute over allowing developing countries the right to provide higher levels of food subsidies for their poor. The WTO draft text, reviewed by Mint, talks about settling the issue within four years or by the 11th ministerial conference, without calling it a peace clause—a term widely used at the negotiations.

These subsidies are linked to food stockholdings meant for the poor, or for food security. Developed nations have offered a peace clause of four years under which if developing countries exceed the public stockholding limit of food, no member-country can drag such a nation to a dispute settlement under WTO rules.

The draft text also says that developing nations benefiting from this decision must fulfill notification and transparency requirements and that they will not use such stockholdings for exports because these could lead to distortions in global trade. While India initially opposed this condition, the absence of any square brackets in the text means that it has now agreed to this proposal.

In a statement to the negotiators on Tuesday, WTO chairman Roberto Azevedo said the Geneva process managed to get convergence in almost all areas except trade facilitation, which aims to simplify customs procedures. “Even Section II of the Trade Facilitation text—our largest iceberg until a couple of days ago—is now virtually “clean”. We still need to conclude work on some of the provisions for LDCs (least developed countries), but otherwise we have a stable and finalised text. I’m afraid the same cannot be said of Section I. We cleaned much of the text but some issues remain unresolved. I don’t think the challenges in those issues are insurmountable. On the contrary, I believe the landing zones are discernible to us,” Azevedo said.

While section I of the trade facilitation text deals with mandatory commitments to be undertaken by developing countries and LDCs, section II talks about special and differential treatment provisions for developing country members and LDCs.

Opposition parties, non-government organizations and farmer groups in India have been opposing the present proposals for Bali, holding that they are against the interests of the Indian poor. The Indian cabinet will take up the issue to finalize India’s stance on the matter on Thursday.

A commerce ministry official who spoke on condition of anonymity on Tuesday said it was too early to talk about a failure, implying a deal is still possible through ministerial-level discussions at Bali. Asked if India would be blamed if the proposed deal fails to materialise, the official said: “Why should India be blamed? Is it wrong to move a proposal at WTO? There are differences in the trade facilitation issue also. Would one blame India for that?”

In trade facilitation, the differences centre around issues regarding authorized operator and expedited shipments, according to Abhijit Das, head and professor at the Centre for WTO Studies at the Indian Institute of Foreign Trade.

Members are required to provide additional trade facilitation measures related to trade and transit formalities to the authorised operators. However, it is yet to be resolved whether such commitments will be mandatory upon developing countries or voluntary. Similarly, under transit facilities, it is yet to be finalised whether members are mandatorily or voluntarily required to adopt procedures allowing for expedited release goods entered through air cargo facilities.

Operationalization of the peace clause is not needed since the existing provisions in the agreement on agriculture are enough to secure India’s interests, said Pradeep S. Mehta, secretary-general of the global NGO CUTS International and former member of the WTO’s high-level panel on the future of trade.

“On trade facilitation, we certainly need reforms in India to reduce the transaction costs and get rid of silly non-tariff barriers, and if a WTO agreement can help us to lock in the domestic reforms, and on a sliding scale, why hesitate?”

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