WTO talks: Why Modi told Kerry his first priority was India's poorest

Prime Minister Narendra Modi reiterated to US Secretary of State John Kerry in clear terms that his stand that India’s food security is as critical as the West’s keenness to see the Trade Facilitation Protocol passed at their meeting on Friday. Reports said Modi made the Indian stand clear “forcefully”, stating that his first responsibility was to India’s poorest.

Despite the widespread perception that India’s intransigence damages the country’s image globally, the prime minister reportedly stood his ground on the interest of the poor being paramount.

India’s refusal to sign the WTO deal on a Trade Facilitation Agreement for which the deadline lapsed on Friday came following insistence by Indian negotiators that a parallel demand for concessions on stockpiling food be signed alongside. The earlier deadline for the public / government stockpiling of food for food security programmes in developing nations to be thrashed out was 2017, a schedule agreed to by the UPA.

According to a report in The Times of India , Modi’s comments to Kerry came after the latter said India’s position on the issue was sending confusing signals to the international community.

“Officials insisted there was no spat,” the report said, adding that the two leaders elaborated on their respective positions on the collapse of the WTO deal “in a forceful manner”.

“I am more concerned about the small Indian farmer, even though I believe the trade facilitation agreement is good for India,” Modi reportedly said. “The first responsibility of my government is to the poorest people of the country. While we don’t oppose the agreement, we believe that the needs of those living on the margins of society, not just in India but elsewhere too, have to be addressed,” Modi told Kerry.

According to a statement from the PMO, Modi said developed countries should understand the challenges of poverty in developing nations and the challenges these governments face in addressing these challenges.

India however said on Friday that it is willing to sign the global trade deal, which now stands torpedoed, if other World Trade Organization (WTO) members can agree to concessions on stockpiling food by governments.

The deadline to sign the WTO pact to ease worldwide customs rules lapsed at midnight in Geneva on Thursday after India demanded that the group also finalise an agreement giving it more freedom to subsidise and stockpile foodgrains than is allowed by WTO rules.

It was not immediately clear if the latest comments by Indian officials would open a window for the deal to be resurrected. In Geneva, a trade diplomat from a developing nation said: “The trust that countries have in what India says is going to be significantly diminished.”

The officials in New Delhi said the deal could be signed as early as September.

“It is ridiculous to say the Bali deal is dead,” said a senior official at the trade ministry, referring to the Trade Facilitation Agreement (TFA) pact that was agreed on the Indonesian island of Bali last year.

Another trade official said: “We expect that the (WTO) director general will call a meeting in September and we are ready to sign the deal in September itself, provided TFA and food security issues are passed together. We are quite hopeful for the deal.”

Reuters reported that some countries, including the United States, the European Union, Australia, Japan and Norway, have already discussed a plan to exclude India from the facilitation agreement and push ahead regardless, officials involved in the talks said.

However, the agency also reported New Zealand Minister of Overseas Trade, Tim Groser, as saying while there had been “too much drama” surrounding the negotiations, any talk of excluding India was “naive” and counterproductive.

Modi’s new approach is being seen as reciprocal and strong, a departure from the UPA’s tendency to capitulate under international pressure.

The prime minister’s approach achieves two things.

For one, in standing his ground during talks with Kerry, Modi has sent out the message that when it comes to national interests, he will put his government’s concerns ahead of accepted notions of international decorum.

There has been speculation that pressure from the Western world could hit bilateral trade ties. Others have insisted that the image of the country takes a beating with the NDA going back on the commitment made by the UPA to finalising by 2017 the issue of food security programmes and the stockpiling of foodgrain for these. Yet others have said the dispute is itself a “side issue”.

But the NDA government has stood firm. Minister of State for Commerce Nirmala Sitharaman has said earlier that India wants to move with the world and adhere to open fair trade practices, but not at the cost of genuine causes and concerns not being heard. India’s co-operation just makes the country look as if it has not been assertive enough, she has said.

Two, it calls the bluff of the West on the so-called death-blow to the WTO. Sticking to its principled stand at the risk of being pushed to a corner on the international stage, India also clarified on Friday that it remains committed to resuming efforts to build consensus on the issue. This has led to the WTO indicating that when the members re-assemble in September, fresh talks could see fresh progress.

Indian officials have held that the Bali deal won’t collapse if the July 31 deadline is missed. Renewed negotiations would simply start.

This is important because, as Ajit Ranade writes in The Mumbai Mirror , the TFA will be no burden for the western world, as most western countries already have smoothly working customs clearance procedures. “But for developing countries this is extra spending. In India, transaction costs are estimated to be 17% of trade value, so trade facilitation is definitely worthwhile. But in some sense TFA is like a free gift to western countries, since their access to India’s large consumer market will be further eased due to TF.”

With inputs from Reuters