WTO trade pact hangs in balance

Business Standard, July 31, 2014
India has well understood it can take advantage of the so-called ‘Peace Clause’ on food-security till 2017, as was agreed in Bali

Frenzied consultations and chaotic debates on signing a trade facilitation agreement (TFA) protocol continued at the World Trade Organization (WTO) headquarters in Geneva, as efforts to soften India’s stance of linking it with a parallel agreement on food stockpiling and subsidies went in vain.

WTO Director General Roberto Azevedo is believed to have held separate meetings with India, the US and the European Union to arrive at a compromise formula, through which theTFA would be signed and a parallel commitment on public stockholding of food grains and farm subsidies would also be arrived at, under a fast-track mechanism.

“It was a sort of déjà vu of the Bali December ministerial. Everything looked chaotic, but the hopes of arriving at a compromise looked strong. The developed countries are in no way going to get this deadline passed,” said a senior trade official in Geneva, on condition of anonymity.

On Wednesday, the Norwegian ambassador to India, Eivind S Homme, on behalf of a wide range of WTO members, handed over a letter to Finance Minister Arun Jaitley and Commerce and Industry minister, Nirmala Sitharaman, urging signing of the TFA by Thursday.

“Adopting the protocol will put WTO members in a position to move ahead with the other elements of the Bali package, and back on track towards concluding the Doha negotiations,” the letter said.

Countries haven’t ruled out arriving at a last-minute compromise. First, it will be “very difficult” for the US, the EU and developing countries to agree to extend the TFA deadline beyond July 31. As a result, they might give in to India’s demands at the last moment, several officials involved in the talks told Business Standard.

Second, India has well understood it can take advantage of the so-called ‘Peace Clause’ on food-security till 2017, as was agreed in Bali. But at the same time, it is also clear if India stands in the way of the TFA, it will find it very difficult to bring all countries together to explore a permanent solution to the issue of food security. Also, the clause will be applicable to existing food stockpiling programmes, not the ones a developing country might want to introduce in the future.

The Peace Clause provides developing countries immunity from being dragged to the WTO Dispute Settlement Body in case a particular country exceeds the limit of farm subsidies.

“Azevedo has too much at stake and will try and ensure a deal that both India and others will accept, as was the case in Bali. India will get all the blame and, what is worse, will lead to the hostility of major developed countries towards India, which will make it even more difficult to find a permanent solution to the food stockholding issue. The whole WTO and the Doha Round will be imperilled, which will hurt India and others badly,” said Pradeep Mehta of trade advisory body CUTS International.

On Monday Azevedo held an informal session with the ambassadors of G-33 and G-20 countries, to understand their concerns and the crisis that would emerge if the TFA was postponed.

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