July 26, 2014
GENEVA – A group of developing countries brought a tectonic shift at the World Trade Organization on Friday by turning the tables against the industrialised countries, when they offered a positive trade agenda to expeditiously arrive at a permanent solution for food security and other development issues, before adopting the protocol of amendment of the contested Trade Facilitation Agreement.
Bolivia, Venezuela, Cuba and India inflicted a huge blow on the dominant actors in global trade by refusing to join consensus on the protocol required for full implementation of the TFA that is being pushed through the WTO with carrots and sticks.
“This is unimaginable, that New Delhi would decide the fate of decisions at the WTO, which has been a preserve of the United States and the European Union for the last 50 years,” said a trade envoy from a Western country.
Only seven months ago, the industrialised countries were triumphant at the WTO’s ninth ministerial meeting in Bali, Indonesia, after having succeeded in clinching the TFA. At one go, that agreement would harmonise customs procedures in the developing world on a par with the industrialised countries. It would offer enhanced market access for companies in the rich and leading developing countries such as China, Korea, Hong Kong and Singapore.
According to former WTO Director-General Pascal Lamy, the TFA would cut tariffs in developing countries by 10 percent
The developing and poor countries, in return, were offered half-baked outcomes in the Bali package on agriculture and development, including an interim mechanism for public stockholding for food security with a promise of a permanent solution in four years, an agreement on general services in agriculture, transparency-related improvements in what are called tariff rate quota administration provisions, and most trade-distorting farm export subsidies and export credits.
The poorest countries, as part of the “development” dossier, secured a set of best endeavour promises concerning preferential rules of origin for exporting to industrialised countries, preferential treatment to services and services suppliers of least developed countries, duty-free and quota-free market access for least-developed countries, and a final monitoring mechanism for special and differential treatment flexibilities.
The TFA has witnessed perceptible progress since the Bali meeting, while other issues raised by developing and poor countries have taken a back seat at the WTO. The mismatch, in terms of progress, between the TFA on one side, and lack of credible movement in agriculture and development on the other, especially in arriving at a permanent solution for public stockholding programmes, has come into the open at various meeting in Africa and elsewhere.
“Even seven months after Bali, we do not have the required confidence and trust that there will be constructive engagement on issues that impact the livelihood of a very significant part of the global population,” Indian Ambassador Anjali Prasadtold WTO’s General Council, which is the organisation’s highest decision-making body, during the ministerial meetings, on Friday.
Prasad said “the Trade Facilitation Agreement must be implemented on as part of a single undertaking including the permanent solution on food security.” Bolivia, Cuba and Venezuela took the same stand as India that all issues in the Bali package have to be implemented on the same and equal footing.
“Nothing is agreed until everything is agreed in the Bali package,” India’s trade minister Nirmala Sitaraman told the Financial Times last Friday.
Against this backdrop, India finally pulled the plug at the General Council meeting by saying that “the adoption of the trade facilitation protocol be postponed until a permanent solution on public stockholding for food security is found.”
Without the protocol, it is difficult to undertake rapid liberalisation of customs procedures as set out in the TFA. Effectively, the Indian stand has put paid to an early adoption of the trade facilitation protocol.
“Today, we are extremely discouraged that a small handful of Members in this organization [WTO] are ready to walk away from their commitments at Bali, to kill the Bali agreement, to kill the power of that good faith and goodwill we all shared, to flip the lights in this building back to dark,” Deputy U.S. Trade Representative Ambassador Michael Punke lamented at the General Council meeting.
Trade envoys from Japan, the European Union and a group of 25 industrialised and developing countries slammed India for its move to oppose the TFA until all other issues, particularly, the permanent solution on food security, are resolved.
“But the TFA cannot be divorced from the other issues, including food security, which need to be converted into a binding agreements on a priority basis,” India’s former trade envoy Ambassador Jayant Dasgupta told IPS Saturday.
Dasgupta, who played a major role in providing the rationale for exempting public distribution programmes for food security from WTO disciplines, offered several reasons why food security must trump over the hard core mercantile trade agenda embodying the TFA.
First, he said, ” the debate on food security exposed the insensitivity of trade negotiators of some major industrialised countries (pushed by seven or eight transnational corporations that dominate global food trade) to address food security issues, arising out of static interpretations of trade rules framed many decades ago, when such problems were not conceived.”
Second, the objections raised by the United States, Canada and Australia in addressing food security are unacceptable because they do not want to concede that there has been more than 650 percent inflation in India since 1986-88.
The WTO agreement on agriculture uses the references prices of 1986-88 for determining domestic support commitments. “Any economist worth his salt would be aghast at the idea that the calculation of subsidies should take place without reference to the current market prices but to market prices which existed twenty six to twenty eight years,” the former Indian trade official argued.
Third, the problem of public procurement and stockholding for food security purposes is resorted to by not only India, but China, Indonesia, Philippines, Pakistan, Egypt, Jordan, Nigeria, Kenya and many other developing countries.
“Because of the way the agreement on agriculture provisions is worded, most of these developing countries could be held to be in violation of the WTO rules,” said Dasgupta, pointing out that “India is articulating not only its own problems but also those of other developing countries.”
And fourth, “by seeking to push India into a corner on this extremely sensitive issue for many developing countries, the United States and its handful of supporters are seriously jeopardising the credibility of the WTO in terms of latter’s ability to correct its mistakes and to be sensitive to the needs of a majority of its developing members.”
(By Ravi Kanth Devarakonda)