UPA almost fails India at WTO, but rescues itself thanks to others.

Over the last few days, there have been media reports that India’s opposition will fail the intended outcome of the upcoming ministerial conference of the World Trade Organisation (WTO) in Bali.

If this turns out to be true, India should be happy because there is pressure from developed countries to accept a “peace clause” that can derail its food security programme, and agree on another proposal called “trade facilitation” that will further marginalise its international trade prospects.

India should oppose both and if it leads to a failed ministerial meeting, the victory should be celebrated. India and other developing countries should be happy about a failed meeting than nursing the wounds of a double whammy.

However, it’s not India’s opposition that will save its people because the country has been silent on “trade facilitation” till Saturday. It was the resistance by other countries that threatens to derail the outcome of the Bali ministerial meeting.

The “peace clause”, if agreed to, will restrict the implementation of India’s Food Security Act for four years, beyond which it will be considered as a violation of the subsidy limits of the WTO, while “trade facilitation” will ensure that developed countries have an upper hand while trading with developing countries.

The “trade facilitation” is a misleading term – it’s not meant to increase and facilitate international trade, particularly exports from developing countries, but is focused on efforts at simplifying border procedures (e.g. the modalities at the port) to make exports by rich countries easier. There is no focus on strengthening infrastructure, building trade capacities and marketing networks, and fostering inter-regional trade that could be of use to countries such as India. It’s therefore not surprising that the draft rules of this proposal have been drawn by the same block of rich countries.

Experts feel that the agreement is over-prescriptive and could violate the policy, legislative and regulatory space of poor countries, and it can also be a huge administrative and institutional burden on countries such as India.

Although India is apparently making some noises now, the commerce ministry did initially support the trade facilitation agreement. In a letter to Basudeb Acharya, Lok Sabha MP and the standing committee chairperson on agriculture, commerce minister Anand Sharma had clearly stated that “recognising the intrinsic merit in the proposal, India has been broadly supportive of the proposal.” In the same letter, he also referred to “autonomous reforms” to reduce transaction costs in international trade.

According to informed sources, Anand Sharma offered full cooperation to conclude the agreement when he met the Director General of WTO in the first week of October 2013. This is also cited as a reason for India’s silence on the issue till 23 November.

So, as of now, the talks have failed in Geneva. But in Bali, the Director General of WTO will try to sort out the differences by holding a meeting of the ministers concerned. This is fraught with danger because the ministers will be alone without the support of their technical experts.

Such a situation can be certainly at India’s disadvantage in view of Anand Sharma’s earlier mistake of assuring support to trade facilitation and the country’s continued silence on the issue as late as Saturday. Some even suggest that India was initially willing to accept even the “peace clause” which could have damaged its food security efforts including the minimum support prices, government procurement and the PDS, which are at the heart of the country’s food security.

The critical point, as Firstpost noted earlier, is the need for absolute transparency about India’s position in international trade negotiations, including Free Trade Agreements (FTA). Without consultation with states and national consensus, the government has no right to unilaterally agree to devious trade proposals.

Hadn’t there been pressure from other countries and criticism from within India, perhaps the government would have succumbed to both “trade facilitation” and “peace clause”.

Source : firstpost.com