Events & Issues

3 December 2015

Kenya WTO Meet

INDIA MUST STAND FIRM

By Dr PK Vasudeva

India is unlikely to secure credible gains for its millions of poor farmers as part of the proposed outcomes of the 10th Ministerial Conference (MC10) of World Trade Organization (WTO) at Nairobi, Kenya on 15-18 December unless the Narendra Modi government stands firm against the US over its opposition to New Delhi’s demands in agriculture.

The Nairobi meeting is a litmus test for the Indian government—whether it stands up for its poor farmers or succumbs to pressure from the United States, which continues to oppose credible and developmental outcome.

At closed-door meetings in Istanbul on the margins of the G-20 trade ministers’ summit in October, Commerce Minister Nirmala Sitharaman made a strong pitch for credible and balanced outcomes at the Nairobi meeting. She demanded outcomes on a special safeguard mechanism and a permanent solution for public stockholding programmes for food security.

But India’s demands fell on deaf ears as, two days after the Istanbul meetings, the US ruled out any outcome on the mechanism. The US trade envoy Michael Punke, who took part in those meetings said there is “zero evidence of convergence” on the safeguard mechanism, which enables developing nations to impose duties on imported agriculture products based on price and volume triggers. The US and its supporters also continue to oppose the permanent solution to public stockholding programmes for food security on the grounds that India and other members of the G-33 failed to table a fresh proposal.

In sharp contrast, India, China and Indonesia on behalf of 47 developing countries, Lesotho, which coordinates the African countries, and Barbados, which speaks for the large coalition of African, Caribbean and Pacific nations, demanded comprehensive and balanced outcomes, particularly deliverables that would help resource-poor farmers in the South.

India has consistently held that a comprehensive and balanced outcome in all the three core negotiating areas, viz., agriculture, non-agricultural market access and services, as well as internally on all three pillars of agriculture, even if with a downward recalibration of ambition, is a necessary condition for fulfilling the development mandate at MC 10.

Chinese trade envoy Yu Jianhua also demanded “credible and balanced developmental outcomes” at the Nairobi meeting. Brazil’s trade envoy Marcos Galvao said developing nations remain frustrated because of the continued failure to address the trade-distorting domestic support in agriculture. Galvao said all promises to reform agriculture subsidies and market access barriers are “broken”.

The EU wants to launch new negotiations while pursuing unresolved issues in agriculture and other areas outside the Doha architecture. However, a majority of WTO members want to continue with the Doha negotiations regardless of the outcomes at Nairobi. India believes that multilateral negotiations such as those envisaged under the Doha Development Agenda (DDA) are an ongoing process, especially when they are aimed at addressing existing inequities in the trading system.

In July, India had clarified it would not ratify a trade facilitation agreement until a permanent solution on food security was arrived at. It had asked WTO to amend the norms for calculating agriculture subsidies so that it could continue to procure foodgrain from farmers at the minimum support price and sell these to the poor at cheaper rates, without violating norms. WTO norms limit the value of food subsidies at 10 per cent of the value of overall foodgrain production. However, the subsidy is computed after taking into consideration the prices two decades ago. India is seeking a change in the base year (1986-88) for calculating food subsidies. It also wants the calculation to factor in inflation and currency fluctuation.

There is apprehension once India completes implementing its food security programme, it could breach the 10 per cent cap. In case a member country drags India to WTO, it might lead to imposition of hefty penalties. According to a WTO filing, India has given farm subsidies of $56 billion. Of this, $13.8 billion (for 23 commodities, including rice and wheat) has adversely affected trade, the WTO says.

The mandate for commencing negotiations for the trade facilitation agreement, as part of the larger DDA, was decided in 2004. Member countries agreed to sign an agreement in this regard at the ministerial meeting in Bali in December 2013. However, the deal could not be signed by the July 31 2014 deadline, as India sought concessions on stockpiling of foodgrain.

Members of the WTO will have to provide permanent solution to India’s food security issue and the country does not see any “hitch” in that, Commerce and Industry Minister Sitharaman has said. “Peace clause is with us and it’s only natural that they (WTO) have to give a permanent solution. Ending months-long deadlock, the WTO in November last year acceded to India’s demand to remove constraints on the food stockpiling issue.

As far as the trade facilitation agreement (TFA) is concerned, India is committed to the pact and has already started work for its full implementation. The Finance Minister has already made a lot of announcements towards achieving trade facilitation. Whether it is the ports being run more efficiently, putting all things online, customs being available 24x7, all these steps are “towards trade facilitation”.

The WTO's draft declaration for the ministerial meeting in Nairobi made no mention of finding a permanent solution to India's concerns on food security, but promised to “address all aspects of agriculture reform as a matter of priority”.

The first draft for the meeting, however, did take note of the failure of the WTO membership to reach an agreement on most issues that were part of the Doha work programme and raised concerns about the rush of regional trade agreements (RTAs).

“We welcome the advances made in the DDA. We regret that it has not been possible to reach agreement on all areas of the negotiations, including agriculture, non-agriculture market access (NAMA), services, rules, including fisheries subsidies, and TRIPS. In particular, we note the importance of agriculture to many WTO members, including LDCs (least developed countries). We will therefore address all aspects of agriculture reform as a matter of priority,” the five-page document, which was released to WTO members on 27 November, said. Further, it said that the RTAs, such as the Trans-Pacific Partnership (TPP) and Regional Comprehensive Economic Partnership (RCEP), remained complementary -- and not a substitute for -- the multilateral trading system.

The government has so far refused to comment on the draft declaration, which has kept the issue of new agenda items open, including some contentious areas such as the link between trade and climate change, currency and the global value chain. These are areas that India is not comfortable with and believes that some of them do not belong to WTO.

India supported by China, Brazil and other G33 developing countries must remain firm to safeguard its millions of farmers interests and food safety at the MC 10 at Nairobi.---INFA

(Copyright, India News and Feature Alliance)

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