John Samuel
The stand of the Government of India on the Trade Facilitation Agreement, thrashed
out during the 9th
ministerial conference in Bali in December ( 5- 7),2013 seems to have created a further negotiating opportunity for developing countries and
least developed countries. However, the
Director General of WTO, Mr. Roberto Azevedo and many countries expressed
strong reservation against India’s refusal to sign the Bali Trade Facilitation
Agreement before the stipulated dead line on 31st July, 2014. The
so-called Bali Package, which includes the Trade Facilitation agreement, emerged during the marathon multilateral negotiations was
supposed to make the WTO more effective and credible ; and all members of WTO were expected to finalize and sign the Trade Facilitation Agreement before 31 July
2014. The unwillingness of India to sign
the Trade Facilitation Agreement has created a sense that World Trade Organisation
is once again in crisis. However, the government of India wanted more
negotiating space with regard to food subsidies and stock-piling, before fully
signing on the new Trade Facilitation Agreement. While the United States
America, EU and Australia criticized India and many members of WTO even
proposed to go forward with the Bali Trade Facilitation Agreement, India’s
stand received support from Bolivia, Cuba and Venezuela . New Zealand
indicated that WTO agreement can’t go forward without India on board. On the
one hand the stand of the new government is in continuation of the India’s
stated position on domestic agricultural support, including public procurement and
food subsidy and on the other hand the tough stand taken by India that Trade
Facilitation Agreement can only be signed along with the parallel pact on allowing
India’s position on food subsidy and stock-piling ( public procurement of food
grains above market price) provide a new window of opportunity for the
government to further negotiate within the WTO. Hence, the stand of the
government of India is both strategic and reasonable and can potentially give a
window of opportunity for the least developed countries and many developing countries
to further negotiate to protect the interests of millions of farmers and poor
people in their respective countries. However, one has to wait and watch to what extent the Government of India would be able to stick to its bargaining ground within the context of the Trade Facilitation Agreement. Many of the skeptics consider the stand of the present government is to create a smoke screen to buy some more time so as to privatize the procurement system. While many of the activists are skeptical about the genuine intention of the of the government of India in the WTO negotiation, the fact of the matter is that the present position of the government is in consonance with the earlier policy-framework and certainly provides one more opportunity to negotiate. When it comes to the international trade negotiations, one has to consider the political economy of international political relations rather than merely taking a stand on the basis domestic political consideration. One does not have to agree with what all the government does or say to take a position on India's stand on international trade negotiations, particularly when it comes to food subsidy and procurement.
It is rather an exaggerated
perception that WTO would collapse just
because India's conditional stand that it would sign the TFA along with the
parallel pact on provisions( food subsidy and procurement of food grains beyond
the prescribed cap of 10%) to ensure food security to its people. The world
trade organisation was formed on 1 January 1995 based on the Marrakesh Agreement after the successful completion
Uruguay Round (1986-94) of Negotiation (8th round of GATT) of negotiation under
the General Agreement on Trade and Tariff. Now WTO has 160 members including
countries and other entities such as EU and 24 observer governments. From the
very beginning of the proposal for an International Trade Organisation (along
with the World Bank and international monetary fund) in the Breton woods
conference in the aftermath of the Second World War, there was serious
disagreement on the issue of multi-lateral trade agreement. It is due to this
difficulty that General Agreement on Trade and Tariff (GATT) was
introduced as an agreed international framework that served as the primary international
instrument till the birth of WTO in 1995. From its very first ministerial
meeting in Singapore in 1996, WTO faced the challenge of bringing everyone on a
level playing field as most of the developed countries wanted to use WTO as a
means to open up the markets of the developing world for their good, services
and products. The third WTO ministerial conference in Seattle, in 1998, faced
the first global protest of citizens and civil society and ended up a failure.
And it is because of fear of the protest the next ministerial conference of WTO
was held in Doha and the Doha development round of negotiation with a
comprehensive agenda commenced in 2001. However, Doha round faced stumbling
block and the main stumbling block along with others was the Agreement on
Agriculture. So the point was WTO has always been going through the thick
and thin of negotiations ever since its formation almost two decades ago. Every
time, when the developing countries (under G 20 or G 33) raised an objection,
the rich countries under the leadership of USA and EU will have the same
counter strategy saying that WTO would collapse. But WTO did not collapse. Now
just because India refused to play the ball, the general outcry in the
American- European media is that India ditched WTO and it would face a
collapse. This is simply a counter strategy by the Euro-America trade axis to
pressurize India to sign on the dotted line, without a hard negotiation.
The major bone of contention within the Doha Development Round of WTO
has been the Agreement of Agriculture and the issues of export subsidies on
agriculture products by Rich countries and domestic support for agriculture by
developing countries. In countries like
India, Agriculture is a means of food and livelihood for more than seventy
percent of the population. India can't afford to compromise its stand on the
right to food security. For those countries ( USA, EU, Australia etc) where
Agriculture is more of an industry to export food and USA and EU has been
giving billions of dollars( as per various estimates 60-70 billion dollars
annually) subsidy for big farming companies and also export subsidies to
export food grains at much cheaper price. But in the least developed countries
and significant number of developing countries, agriculture is not only a means
of livelihood of the majority of people but also ensures the basic right to
food. So it is imperative for the least developed countries and countries like India
(which still got the largest number of poor people), to protect the interests
of farmers as well as ensuring food security for millions. Hence for India, the
first and foremost issue is that agriculture is important to feed more than a
billion people and the lives and livelihood of large sections of the rural populations
(in most of the Indian states) depend on agriculture. The parliament of India
passed the food security act in 2013 and this requires procurement of food grains
(stock-piling is the technical term) and food subsidy to ensure right to food
to all people, particularly poor and marginalized.
India has always (before
Bali, during Bali negotiation) opposed this limit for food subsidy and public procurement
and demanded a parallel pact, which would allow developing countries to
continue subsidizing and stockpiling food. During the tactful truce( negotiated
by the initiative of the USA) during the 9th ministerial in Bali, WTO members
agreed to not file complaints against India’s food-subsidy program until a
permanent solution is worked out by December 2017. However the new NDA government
in India has demanded a more immediate solution, preferably by the end of 2014,
in exchange for signing the TFA
When India raised these objection in Bali in December 2013, India was eventually given a 'four-year' window( by 2017) to settle the issue of Stock-piling ( and food subsidy. .The WTO-imposed deadline to sign the protocol by member countries was July 31 of 2014 , following which it was meant to come into effect from July 2015. However, India's veto has now stalled the finalization of the so-called Bali Package on Trade Facilitation Agreement. India's stand is that this can still be negotiated and finalized during the next ministerial meeting or in September (though India is still insistent on signing a parallel pact along with TFA) .By agreeing to TFA, India has to reform/change its customs laws and also reduce custom duty/tariff on many items (including food grains) and ensure internationally approved electronic clearing facility (to avoid red-tapism and 'corruption etc) in all ports and airports. This also means significant new investment. The new government insisted that the India should be allowed to have the provision for food subsidy and stock -piling (instead of waiting up to 2017) before agreeing to sign on TFA. In a way, this is very much a continuation of the negotiating strategy India adopted ever since the beginning of the Doha Round in 2001.
During
the Bali WTO ministerial December 2013 India continued to insist its stand on
food subsidy and stock-piling (public procurement of food grains). Most of the
developed countries opposed this. In Bali, eventually even Brazil and China did
not support India’s position. However, India's stand was supported by
South Africa, Argentina, Kenya and Nigeria and many other countries. It is true
that government of India agreed to sign the Trade Facilitation Agreement , with
the assurance of resolving the issue of food subsidy and stock piling by December
201y. However, once India signs the TFA in July 2014, it is binding on us and
FTA will be in operation by July 2015. And then in 2017 we will have less
'bargaining' option after already sign the TFA in July 2014. So if we don’t
negotiate the issue of food subsidy and stockpiling now, India may get in to a
negotiation trap in 2017 and it will have huge political implications in the
context of a country wherein food subsidy, PDS and public procurement are
important policy measures to protect the small and medium scale farmers as well
as to ensure food security to the poor and marginalized. Hence, my own stand is
that parallel pact and TFS should be agreed simultaneously. While the present negotiating position of
government of India is in continuation of its policies and the decision is
strategic in nature, the key question is to what extent the government of India
can also be able to make a collective bargain to support the cause of the least
developed countries and other developing countries where agriculture is a means
of livelihood and food for the large majority of farmer, agricultural labours
and poor. The question is whether India can stand up to the sheer international
pressure exerted by the rich and power countries. The question also whether India would be able to play a leadership role at the international level in trade
negotiation without compromising the interests of hundreds of millions of
marginal and small scale farmers in the least developed and developing countries.
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