India should get its own deal at WTO before saying yes to US, EU

Narendra Modi government’s reported stand that India will not agree to a critical trade pact of WTO until India’s food security concerns are addressed is a strong and right message to the West, which has been trying to push its agenda at the cost of millions of hungry poor in India.

According to an IBNLive report, India has decided not to sign the protocol of the Trade Facilitation Agreement (TFA), concluded at the Bali ministerial conference of the WTO held in December last year. The report quoted senior government officials, although politically there hasn’t been a final word on this.

Earlier this week, several farmers’ organisations in India, including that of the BJP and the CPM, had urged the centre not to cow down to the pressures of the US and the EU and sign the protocol until their opposition to its food security proposal is cleared.

The deadline for concluding the TFA protocol is 31 July.

India should get its own deal at WTO before saying yes to US, EU

File photo of PM Narendra Modi. PTI

India’s stand is absolutely ethical and politically correct, although the western nations think otherwise, because when it agreed for the TFA in Bali, 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 percent 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.

India’s concerns were reflected at the Bali ministerial conference in a G33 food security proposal. The G33, which includes India, made submissions and suggestions on various options for protecting farm livelihood and food security requirements of their populations. These proposals were made eight years ago and included acquisition of food stocks by developing countries with a clear aim of protecting food security initiatives from the ambit of subsidies. The G33 proposals also raised the fact that even the grossly disfavouring 10 percent subsidy limit was calculated on the basis of a fixed reference price of 1986-88, when prices were substantially lower.

Because of this proposal, the “Bali package” was inconclusive as India refused to agree to a the TFA, which could help expand exports from western countries by standardising customs procedures across the world. While the west pushed for the TFA, India pushed for the food security proposal. There were intense negotiations, including the WTO reaching out to individual countries, including India. Finally, the US, EU and the countries backing them agreed for an interim Peace Clause, which kept aside the food security concerns for four years in lieu of the TFA. India wanted a permanent agreement on the issue and not an interim solution.

Now apparently, in the summary of the Chair of the G20 ministers, who met in Sydney on 19 July  (in which India’s Nirmala Seetharaman 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.

The stand of the US, EU and its allies is that the food security issues can be sorted out before 2017 (within the four year period of the Peace Clause) but the TFA cannot wait because of its 31 July deadline.

This urgency favours India. If the US and EU want the TFA to go through, it will indeed has to give India what it wants. Meanwhile, media reports from the west suggest that the US and EU are engaged in a negative PR campaign against India by blaming it for failing the Bali package.

Although the peace clause appeared to be a concession in December, it’s replete with conditionalities. For instance, after four years, India can be taken to WTO’s dispute settlement. More over, the Anti-Circumvention/Safeguard clause stipulates that counties that use this clause “shall ensure that stocks procured under such programs 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 shouldn’t settle for anything less than a “deal” on the food security proposal, and not the peace clause, if it has to agree to TFA. For India, it must be a “single undertaking”.

And for Modi, it will be a strong message to the rest of the world that he really means business.

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Updated Date: Jul 26, 2014 08:27:39 IST

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