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How Modi's WTO stand is a far cry from UPA's weak trade policies

Narendra Modi government’s continued stand at the WTO that India’s food security is as important as the Western nation’s desperate desire to get the Trade Facilitation Protocol passed is an emphatic departure from the multilateral and bilateral trade policies pursued by the Manmohan Singh government during the last ten years.

The new approach is reciprocal and strong, while the UPA had tended to capitulate under international pressure.

Narendra Modi. AFP

Narendra Modi. AFP

Through this bold decision, in which the the 31 July deadline for the Trade Facilitation Agreement (TFA) has lapsed, India has told the US and the EU that its primary concern is its hungry poor and not their goodwill. Without agreeing to safeguarding their food interests, India cannot agree to a treaty aimed at maximising (mostly) rich countries’ exports.

For the first time in the last ten years, India has also told the world that when it comes to national interests, it doesn’t care for what is considered good manners in the international forums. Indirectly, it has also told the world that it doesn’t stand by the weak position of its predecessor, the UPA, which had agreed for the TFA without negotiating hard for a “single undertaking” - taking decisions on both the issues together.

When the UPA government had agreed for the TFA in Bali during the last round of negotiations, it was in lieu of a proposed agreement on its food security requirements. The US, EU and other developed countries had opposed India’s food subsidy programmes if they exceeded 10 per cent of the total agricultural production, the limit permitted under the WTO (World Trade Organisation) rules.

The WTO Agreement on Agricultural (AoA) subsidies allows only 10 percent (of production) subsidy for most of the developing countries. Rich countries argued that the Food Security Bill exceeds this 10 percent and therefore it would “distort” international trade. Using the AoA, they picked on India’s stock holding of food grains, minimum support prices to farmers and other subsidies while overlooking the fact that they dole out billions of dollars as indirect subsidies in their respective countries.

In hindsight, it’s clear that the UPA government shouldn’t have wilted under pressure at the WTO and should have bargained hard. If there was no agreement for a “single undertaking”, it should have docked the TFA. Instead, it allowed for cherry picking by the US and the EU, which became a source of international pressure and bad international press. It’s clear now that had the UPA taken a firm stand, things could have been favourable to India.

India’s current strong position appears to have led to some softening of stand by the US. On Thursday, American secretary of state John Kerry said that he understood India’s concerns about its food security requirements. He also expressed hope that the Bali package would address them. This is a stated departure from the position of the block of countries led by the US and EU earlier. In all its dealings towards the TF protocol, they had been dismissive of the food security requirements of India.

The US had earlier said that "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”.

While countries such as the US cry foul of a “missed deadline” because of India’s firm stand, experts point to the fact that the history of WTO is dotted with a number of deadlines. Chakravarthy Raghavan, editor emeritus of South-North Development Monitor, said that “if the deadline for the TF protocol is missed, it will be one of a long line of ‘missed deadlines' from the inception of the WTO on 1 January 1995: those mandated by Ministerial Conferences and thus ‘Ministerial political commitments', and those missed in terms of legally binding mandated deadlines set by the Marrakech Treaty.”

“Many of these missed deadlines and unfulfilled obligations are central to the demands of developing countries and the fulfillment of the development mandate under the Doha negotiations, and a vast majority of missed deadlines is because of the US and developed countries withholding consensus,” he adds.

India therefore shouldn't worry about another missed deadline. What’s important is its sovereign right over its domestic policies for the welfare of its people.