Food subsidy fight derailing WTO deal

Activists demonstrate outside the venue for the ninth World Trade Organisation ministerial conference in Bali yesterday. Photo: AFP

India's refusal to budge on some rules governing food subsidies means the ninth WTO Ministerial Conference might end today in Bali without any landmark global trade deal.
“Agriculture sustains millions of subsistence farmers—their interests must be secured. For India, food security is non-negotiable,” Indian Commerce and Industry Minister Anand Sharma said yesterday in his opening speech to the WTO's ministerial meeting.
"This is a fundamental issue. We will never compromise," he told reporters later on.
With national elections looming, India next year plans to fully implement a welfare programme to provide cheap food to 800 million people that it fears will fall afoul of WTO rules, which curb farm subsidies to 10 percent of production.
The programme, which relies on large-scale stockpiling and purchases at minimum prices, is a central plank of the government's bid to win a third term in office next year.
A proposal led by the US offered to waive the 10 percent rule until 2017, but India has rejected it demanding that the exemptions continue indefinitely until a solution is found.
The reason India's defiance is proving to be a deal-breaker is that all member countries must agree to the terms of the Bali package.
Unsurprisingly, the neighbouring country is increasingly finding itself isolated among developing nations in the 159-member WTO, many of which fear New Delhi is threatening a bigger deal for the sake of scoring political points at home.
If completed, the Bali package centring on trade facilitation, food security and LDC package could add nearly $1 trillion to the world economy.
Sharma, however, said that domestic politics were not a factor in its WTO stance, instead framing the issue as a divide between industrialised countries and a developing world.
"India speaks for the vast majority of people in the developing countries and the poor countries. India is not alone," he said.
The Bali package is lop-sided in favour of the rich nations, adding it does not require the developed countries to make binding commitments for the benefit of developing countries, he said. In contrast, developing countries would be required to undertake significant commitments in trade facilitation, he said.
“If this imbalance in the Bali package is not redressed, the world at large would accuse all of us of collectively making hollow promises and keeping the tank empty on development contents. It is better to have no agreement than to have a bad agreement.”
Failure to strike a deal this time at Bali, many say, would see the erosion of the WTO's role as global custodian of the world's trade rules by regional pacts between major trading nations, such as the 12-country Trans-Pacific Partnership spearheaded by Washington.
Robert Azevedo, the WTO's director-general, said a trend in that direction would have "tragic" consequences for countless poor in developing countries around the world that are struggling to compete in the global marketplace.
"Let us not sugar-coat reality. Leaving Bali this week without an agreement would deal a debilitating blow to the WTO as a forum for multilateral negotiations," US Trade Representative Michael Froman said.
"And if that happens, the unfortunate truth is that the loss will be felt most heavily by those members who can least afford it."
The keystone of the Bali package is a “trade facilitation” deal that sets binding rules for members to remove red tape and ease the flow of goods through borders.
Kofi Annan, the former secretary-general of the United Nations, said the deal to cut red tape at borders should be a “low-hanging fruit” that would benefit millions of people around the world.
“More to the point, such a deal is the best hope we have for keeping global trade discussions alive. If we do not get a deal in Bali, then we face the risk that rich countries focus on trade deals between themselves, thereby excluding lower income countries who need this trade the most.”
But for Bangladesh, it would mean that it would be deprived of several vital benefits being offered in the LDC package, with no deal done in Bali.
The LDC package includes: relaxation of Rules of Origin, preferential market access conditions to suppliers of services from LDCs, improvement of trade environment in which cotton-producing LDCs operate, meaningful duty-free and quota-free access.