Events & Issues
New Delhi, 9
December 2013
India’s
‘Victory’ At WTO
IS FOOD SECURITY ASSURED?
By Col
(Dr) PK Vasudeva (Retd)
Will India’s
jubilation find resonance with its farmer and people, is a question being
debated after the World Trade Organisation’s Bali Ministerial conference.
Though the meeting concluded a day later than scheduled, thanks to long and
tough negotiations, at the end there was an agreement on a package of issues designed
to streamline trade, allow developing countries more options for providing food
security, boost least developed countries’ trade and help development more
generally.
The WTO Director-General
Roberto Azevêdo’s remark is all telling. He stated: “For
the first time in our history: the WTO has truly delivered.” Echoing calls from
many delegations, he said that members’ attention should now turn to rest of
the round, known semi-officially as the Doha Development Agenda. “With the Bali package you have reiterated not just your commitment
to the WTO — but also to the delivery of the Doha Development Agenda.”
Importantly, the agreement on the
agriculture part of the Bali Package required sorting out two issues. One, much
of the focus was on shielding public stockholding programmes for food security
in developing countries, so that they would not be challenged legally even if a
country’s agreed limits for trade-distorting domestic support were breached.
Two, was about “tariff quota
administration,” how a specific type of import quota (a “tariff quota” where
volumes inside the quota have a lower duty) is to be handled when the quota is
persistently under-filled. Members have agreed on a combination of consultations
and providing information when quotas are under-filled. The one remaining issue
to be settled was which countries would reserve the right not to apply the
system after six years: these will be Barbados,
Dominican Republic, El Salvador, Guatemala
and the US.
India, however, was on the top. The UPA-II also heaved a
sigh of relief and is all set to claim its major victory. The WTO agreed to
allow countries to provide subsidy on staple food crops without any threat of
punitive action. The concession not only salvaged the current round of world
trade talks from the brink of failure, but also gives hope to New Delhi that its national Food Security Act
will have no hindrance. This apart, India’s non-negotiable
stance on food security that the 159-member WTO reached, which is being termed
as “a historic agreement” is bound to give a boost to global trade by $1
trillion.
As per the deal, nations can now
fix a Minimum Support Price (MSP) for farm produce and sell staple grains to the
poor at subsidised rates. Additionally, countries have got the go-ahead to
store foodgrains to meet their contingency requirements. An elated Minister of Commerce
& Industry Anand Sharma had this to say: “It's a path-breaking
decision...the first major one or agreement that has been reached ever since
the WTO was established…The previous agreement based on the Uruguay round was
inherently imbalanced and flawed…as it was against the developing nations and
that is why support was mobilised and it became an imperative to launch a new
round of negotiations, which is the Doha Development Agenda.”
At the end, India’s refusal
to accept a four-year ‘peace clause’ for ostensibly breaching farm subsidy caps
under the Agreement on Agriculture (AoA) of the WTO has been vindicated. The germane issue here was not about the sovereign
right to provide unlimited agricultural subsidies or to keep them insulated
from global rules of trade. The problem lay in the AoA’s rules itself, which
are hopelessly flawed and outdated. The most telling example is the method used
for computation of subsidies. Say, a farmer, growing wheat in India is
regarded as having received a subsidy if the official procurement price paid to
him is higher than the world ‘reference’ price.
But the AoA fixes the latter at
levels prevailing way back in 1986-88. Global wheat prices, which averaged
$150-160 a tonne then, are now around $300. These ruled even higher at $400 a
tonne, the landed cost at which India
imported the grain in December 2007. The minimum support price of around $225
for this year’s crop translates into a ‘subsidy’ of $75 a tonne to the wheat
farmer under the current AoA rules, which is being negatively subsidised to
him.
India
was therefore right in demanding that the world prices used in determining farm
subsidy caps be updated to reflect present reality. Moreover, there are
provisions in the AoA that exempt subsidies if these are being availed by
‘low-income’ and ‘resource-poor’ producers or if these are handed out in
countries suffering “excessive rates of inflation”. Such general clauses are
vague and require much more clarity.
The Bali Package has sometimes
been described as the first major agreement among WTO members since it was
formed in 1995 under agreements from the 1986-94 Uruguay Round negotiations.
The most significant for global commerce is the trade facilitation part of the
package, which is about cutting red tape and speeding up port clearances.
Much of the rest of the package
focuses on various issues related to development, including food security in
developing countries and cotton and a number of other provisions for least
developed countries. It also includes a political commitment to reduce export
subsidies in agriculture and keep these at low levels, and to reduce obstacles
to trade when agricultural products are imported through quotas.
The trade facilitation decision
is a multilateral deal to simplify customs procedures by reducing costs and
improving their speed and efficiency. It will be a legally binding agreement
and is one of the biggest reforms of the WTO since its establishment in 1995 —
other agreements struck since then are on financial services and
telecommunications, and among a subset of WTO members, and agreement on free
trade in information technology products.
The objectives are: to speed up
customs procedures; make trade easier, faster and cheaper; provide clarity,
efficiency and transparency; reduce bureaucracy and corruption, and use
technological advances. It also has provisions on goods in transit, an issue
particularly of interest to landlocked countries seeking to trade through ports
in neighbouring countries.
Part of the deal involves
assistance for developing and least developed countries to update their
infrastructure, train customs officials, or for any other cost associated with
implementing the agreement.
The text adopted in Bali is not final, although the substance will not
change. It will be checked and corrected to ensure the language is legally
correct, aiming for the General Council to adopt it by 31 July 2014.
However, for New Delhi
as of now the focus is providing food security and with success on its sleeve,
all energy will be devoted to achieve success at home. --- INFA
(Copyright, India News and Feature Alliance)
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