Posted by Dr. Gopal Unnikrishna Kurup
Demanding that efforts to promote global trade should be linked to food security, India last Friday at the meeting of the World Trade Organization (WTO) in Geneva effectively blocked a Trade Facilitation Agreement (TFA) that would have clamped restrictions on the freedom of developing countries to subsidize and stockpile food. By and large the Indian media has rather glossed over or muffled the issue.
India has been pressing for implementation of the Trade Facilitation Agreement (TFA) as a part of a single undertaking that includes a permanent solution on public food stockpile, necessary for its food security programme. It is stockpiling food for its poor, citing the need for food security, which is contrary to the WTO norms. The TFA is scheduled to be implemented in 2015. This agreement, being strongly backed by the US and industrially developed Western countries, is aimed at simplifying customs procedure, increasing transparency and reducing transactions cost. US and other Western countries are craving the revival of their faltering economies through unhindered international trade by way of uniform and easy procedures at customs.
India pointed out that stockholding as a measure of food security is necessary so that the millions of farmers and the poor families who depend on domestic food stocks do not have to live in constant fear, and for this purpose, suggested that trade facilitation protocol arrived at the meeting in December last year at the Indonesian resort city of Bali be postponed till a permanent solution on public stockholding for food security is found. Indian trade officials hastened to assure that India was basically on board with the trade-facilitation measures, but it needed the WTO to go further and start to recognize such unique issues in India and other developing countries. India's decision had immediate support of developing countries like Bolivia, Cuba and Venezuela.
India's genuine problems relating to WTO rules on food stockpiling and subsidizing. At the Bali meeting the WTO had proposed a formula that defines how much money a country can spend creating a food stockpile for security and support for farmers. The current WTO norms limit the value of food subsidies at 10 per cent of the total value of food grain production of a country. So the US gives about $120 billion (Rs 7.2 lakh crore) as agricultural subsidy as compared to India’s $12 billion (Rs 72,000 crore).
The subsidy support is measured at prices that are over two decades old, not at current prices and India is asking for a change in the base year (1986) for calculating food subsidies. India wants the rules changed to allow it to go beyond the limit. India has hundreds of millions of farmers and consumers who are on or just above the poverty line, and the country needs more freedom to help its citizens. Besides, TFA is replete with conditionalities. For instance, after four years, India can be taken to WTO’s dispute settlement. Moreover, the anti-circumvention/safeguard clause stipulates that counties that use this clause “shall ensure that stocks procured under such programmes do not distort trade”. This is fundamentally against India’s system of minimum support prices and direct procurement that sustain both its PDS as well as farming.
India agreed to the trade-facilitation package earlier explicitly with the understanding that the WTO members would find some sort of permanent way to address India's demands. While India originally agreed to give the WTO four years to find a permanent solution, it now is not prepared to put the issue on limbo and wants the solution before it will approve the trade facilitation package. India is of the view that the Trade Facilitation Agreement must be implemented only as part of a single undertaking including the permanent solution on food security. India has the feeling that the WTO wasn't taking its demands seriously, so it proposed that discussions on how to implement everything agreed to in Bali should be extended until the end of the year. The meet of ministers of the G20 in Sydney on July 19, in which India’s Nirmala Sitharaman also participated, was completely silent over the food security proposal, while it referred specifically to the TFA. This was considered as G20 pushing for its interests while ignoring the critical requirements of the people in developing countries.
Bali meeting was an attempt to jump-start the long-stalled Doha round of WTO talks that began in 2001 in the Qatari capital. The Doha round was an ambitious plan to open up more sectors of the global economy to more trade. But it has been stuck because the WTO depends on consensus for decisions and countries can't agree on many of the controversial changes sought.
India's tough stand has surprised the west and angered USA, and prompted criticism from a block of 25 WTO members, some of whom said that India's brinkmanship could undermine the international trading system as the country has basically hijacked the trade talks to force a change on one issue. US and other Western countries are craving the revival of their faltering economies through unhindered international trade by way of uniform and easy procedures at customs. They are also exercised more so because this has come soon after the announcement of a BRICS bank headquartered in China . One may recall that PM had given the electoral promise to Indian farmers during the elections that the government would ensure a 50% profit margin to them. Top sources in the government said the prime minister was the main moving force behind the tough stand at the WTO by Commerce Minister Nirmala Sitharaman.
If the US and EU want the TFA to go through, it will indeed has to give India what it wants. By this India and Modi send a message to the West which had its doubts over Modi before the elections and, after he became prime minister, whether he had statesman like ability. Some liken this to Atal Bihari Vajpayee seeking to announce India's arrival on the world stage as a global power by testing nuclear weapons in 1998.
India's Torpedo at a Smug WTO
Prime Minister Narendra Modi and Commerce Minister Nirmala Sitharaman at 6th BRICS Summit in Fortaleza, Brazil
Demanding that efforts to promote global trade should be linked to food security, India last Friday at the meeting of the World Trade Organization (WTO) in Geneva effectively blocked a Trade Facilitation Agreement (TFA) that would have clamped restrictions on the freedom of developing countries to subsidize and stockpile food. By and large the Indian media has rather glossed over or muffled the issue.
India has been pressing for implementation of the Trade Facilitation Agreement (TFA) as a part of a single undertaking that includes a permanent solution on public food stockpile, necessary for its food security programme. It is stockpiling food for its poor, citing the need for food security, which is contrary to the WTO norms. The TFA is scheduled to be implemented in 2015. This agreement, being strongly backed by the US and industrially developed Western countries, is aimed at simplifying customs procedure, increasing transparency and reducing transactions cost. US and other Western countries are craving the revival of their faltering economies through unhindered international trade by way of uniform and easy procedures at customs.
India pointed out that stockholding as a measure of food security is necessary so that the millions of farmers and the poor families who depend on domestic food stocks do not have to live in constant fear, and for this purpose, suggested that trade facilitation protocol arrived at the meeting in December last year at the Indonesian resort city of Bali be postponed till a permanent solution on public stockholding for food security is found. Indian trade officials hastened to assure that India was basically on board with the trade-facilitation measures, but it needed the WTO to go further and start to recognize such unique issues in India and other developing countries. India's decision had immediate support of developing countries like Bolivia, Cuba and Venezuela.
India's genuine problems relating to WTO rules on food stockpiling and subsidizing. At the Bali meeting the WTO had proposed a formula that defines how much money a country can spend creating a food stockpile for security and support for farmers. The current WTO norms limit the value of food subsidies at 10 per cent of the total value of food grain production of a country. So the US gives about $120 billion (Rs 7.2 lakh crore) as agricultural subsidy as compared to India’s $12 billion (Rs 72,000 crore).
The subsidy support is measured at prices that are over two decades old, not at current prices and India is asking for a change in the base year (1986) for calculating food subsidies. India wants the rules changed to allow it to go beyond the limit. India has hundreds of millions of farmers and consumers who are on or just above the poverty line, and the country needs more freedom to help its citizens. Besides, TFA is replete with conditionalities. For instance, after four years, India can be taken to WTO’s dispute settlement. Moreover, the anti-circumvention/safeguard clause stipulates that counties that use this clause “shall ensure that stocks procured under such programmes do not distort trade”. This is fundamentally against India’s system of minimum support prices and direct procurement that sustain both its PDS as well as farming.
India agreed to the trade-facilitation package earlier explicitly with the understanding that the WTO members would find some sort of permanent way to address India's demands. While India originally agreed to give the WTO four years to find a permanent solution, it now is not prepared to put the issue on limbo and wants the solution before it will approve the trade facilitation package. India is of the view that the Trade Facilitation Agreement must be implemented only as part of a single undertaking including the permanent solution on food security. India has the feeling that the WTO wasn't taking its demands seriously, so it proposed that discussions on how to implement everything agreed to in Bali should be extended until the end of the year. The meet of ministers of the G20 in Sydney on July 19, in which India’s Nirmala Sitharaman also participated, was completely silent over the food security proposal, while it referred specifically to the TFA. This was considered as G20 pushing for its interests while ignoring the critical requirements of the people in developing countries.
Bali meeting was an attempt to jump-start the long-stalled Doha round of WTO talks that began in 2001 in the Qatari capital. The Doha round was an ambitious plan to open up more sectors of the global economy to more trade. But it has been stuck because the WTO depends on consensus for decisions and countries can't agree on many of the controversial changes sought.
India's tough stand has surprised the west and angered USA, and prompted criticism from a block of 25 WTO members, some of whom said that India's brinkmanship could undermine the international trading system as the country has basically hijacked the trade talks to force a change on one issue. US and other Western countries are craving the revival of their faltering economies through unhindered international trade by way of uniform and easy procedures at customs. They are also exercised more so because this has come soon after the announcement of a BRICS bank headquartered in China . One may recall that PM had given the electoral promise to Indian farmers during the elections that the government would ensure a 50% profit margin to them. Top sources in the government said the prime minister was the main moving force behind the tough stand at the WTO by Commerce Minister Nirmala Sitharaman.
If the US and EU want the TFA to go through, it will indeed has to give India what it wants. By this India and Modi send a message to the West which had its doubts over Modi before the elections and, after he became prime minister, whether he had statesman like ability. Some liken this to Atal Bihari Vajpayee seeking to announce India's arrival on the world stage as a global power by testing nuclear weapons in 1998.
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