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Food security and the WTO – What India says
THERE has been a volley of accusations towards India of reneging on its commitments made at Bali and putting the future of the WTO in jeopardy. These accusations have come from within the WTO and from vested interests outside of it. The reality is different . . .
ON July 31, 2014, the World Trade Organisation (WTO) missed a deadline to approve a protocol amending the Trade Facilitation Agreement (TFA). Missing deadlines is not unusual at the WTO.
Many more significant ones have been missed, including the target date set for the conclusion of the Doha Development Round in 2005.
What was striking about the July 31 target was that, in a break from past trends, it affected the interests of developed countries rather than those of developing countries and LDCs.
Ironically, some developed countries, including the US, Australia and members of the EU, are themselves to blame for what happened due to their reluctance to engage on important issues like public stock holding for food security purposes and LDC issues that were agreed to at the Bali Ministerial meeting in December 2013.
There has been a volley of accusations towards India of reneging on its commitments made at Bali and putting the future of the WTO in jeopardy. These accusations have come from within the WTO and from vested interests outside of it. The reality however is different.
From the beginning, India has reiterated its commitment to all 10 decisions taken at the Bali Ministerial meeting, including the decision on Trade Facilitation (TF) and food security. In line with the core WTO principle of “single undertaking” — that “nothing is decided till everything is decided”— India merely said that there should be delivery on all Bali decisions – including the decision on public stock holding for food security purposes — in a time-bound manner.
Contrary to the perception created, a decision on TF was not lost but merely postponed.
While India has all along reiterated its commitment to TF, it has sought an equal level of commitment and progress on the issue of public stock holding, which is extremely important for India because it affects livelihood and food security – two important elements of the Government’s policy of promoting inclusive growth and development.
India accounts for one-sixth of the world’s total population and nearly 48 per cent of its workforce is employed in agriculture, while 22 per cent of its population lives under the meagre 1.25 dollar-a-day poverty line.
The Indian Government is committed to providing Minimum Support Prices (MSP) for low income farmers. If India is forced to curtail procurement at MSP, this will affect the livelihood of a large number of subsistence farmers as well as affect public distribution programmes for the poor.
The livelihoods of more than 90 per cent of Indian farmers would be put at risk and more than 40 per cent of its population, dependent on subsistence food, would be rendered destitute. The necessity of public stock holding is thus self-evident. This is a legitimate policy space that India cannot concede.
India has not been alone on this issue and has made several submissions as a member of the G-33 grouping (comprising 46 developing country members of the 159 member WTO).
It is a different matter that developed countries have preferred to ignore the legitimate and principled proposal by India to have concrete progress on the issue, and also that till the time such a decision is taken, there should be a legally binding decision on a “peace clause” to avoid legal challenges in the WTO dispute settlement mechanism.
The frenzy around TFA in the last few weeks is difficult to understand in the face of inactivity on food security in the last six months since the Bali Ministerial meeting. The G-20 Trade Ministers’ meeting held in Sydney on July 19 devoted most of its time and energy in pushing the TFA.
WTO issues should be negotiated in the WTO where they belong. The strength of the WTO, as compared to its predecessor organisation – the GATT — is that not only is the WTO driven by consensus and the principle of single undertaking, it has a huge membership of about 159, the vast majority of which are developing countries and LDCs. It would be unfair for 20 countries to abrogate to themselves the right to decide on WTO matters to the exclusion of the other 139 members.
It was unfortunate that the Chairman’s conclusion at the end of the G20 Trade Ministers’ meeting did not even mention the concerns expressed by several developing countries such as India, South Africa, Argentina and Brazil, but projected a very one-dimensional TFA-centric view.
One could argue whether it was absolutely essential for India to not sign the TFA protocol on July 31.
India is guided by its own experience of multilateral trade negotiations and also the negotiating history of WTO and GATT. It is unlikely that once the TFA protocol is signed, developed countries will return to the negotiating table to discuss food security or lend any attention to concluding the Doha Round. Other issues of interest to developing countries and LDCs may also fall off the table in this process.
A case in point is the cotton issue wherein four African LDCs – Benin, Mali, Chad and Burkina Faso — seek cuts in cotton subsidies and tariffs. The issue remains unresolved in the face of opposition from the rich farmers of the US. The US provides subsidies of over US$120 billion to support its farmers, while poor subsistence farmers in developing countries and LDCs languish.
There has also been a history of issues of interest to developing countries falling by the wayside.
At Doha in 2001, three main decisions were taken, namely (i) on liberalising trade, (ii) implementation related issues and (iii) the Doha Declaration on TRIPS Agreement and public health.
Implementation issues, which encapsulate issues that obstruct developing countries from taking advantage of WTO laws, have witnessed negligible progress.
On TRIPS issues, developing countries are threatened with unilateral measures such as Section 301 of the US Trade Act, even though their actions might be fully compliant with the TRIPS Agreement. On trade liberalisation, the issues of interest to developing countries such as agriculture, fisheries, cotton, etc. have been stonewalled although the Doha Round is premised on ‘development’.
Trade Facilitation, its place in WTO negotiations and the hype created around the actual benefit of TF to world trade need to be seen in the right perspective.
TF, one of the four Singapore issues (others being investment, competition and transparency in government procurement), was dropped at the Cancun WTO ministerial meeting in 2003.
On the strong insistence of the US and EU, TF came back to the negotiating table following the Hong Kong WTO Ministerial meeting in 2005.
Today, it has raced ahead of all other issues, with developed countries wanting instant delivery.
India has always supported TF. However, the problem it has is with the principle of unequal progress on different tracks – particularly those of crucial interest to developing countries – that threaten to destroy the delicate balance of Doha Round negotiations.
TF involves the simplification of trade procedures in general and customs procedures in particular and can be done autonomously, as India and many countries are doing to the extent of their priorities and availability of financial and technical resources.
TF is of prime importance to developed countries as it provides increased market access and reduces transaction costs for their big MNCs.
To aid TF, nothing prevents developed countries from providing financial and technical assistance to other countries. But to have a legally binding multilateral commitment on TF while ignoring livelihood and food security issues for a vast population of the world is not a tenable situation.
Agencies have spewed astronomical figures regarding the trade volumes that TFA may add, ranging from US$64 billion to US$400 billion to US$1trillion. The rationality of their basis, however, is doubtful.
An emerging trend in the WTO is the virtual hijacking of the multilateral process by developed countries by pursuing “plurilateral negotiations” that involve only a subset of WTO members, thereby grossly undermining the multilateral basis of Doha Development Round negotiations.
Some issues being discussed in such plurilateral discussions are services, expansion of IT products and environmental products. This plurilateralism and cherry-picking of issues threatens the conclusion of the Doha Round.
Another threat to the WTO comes from the penchant of developed countries to negotiate broad RTAs such as the Trans Pacific Partnership (TPP) and the US-EU Transatlantic Trade and Investment Partnership (T-TIP). Is it fair to attribute lack of progress on Doha to developing countries?
On a positive note, the world stands today at the threshold of a rare opportunity.
By making development the centrepiece of the Doha Development Round and engaging in serious negotiations with the spirit of ‘give and take’, developed countries can reinvigorate the multilateral trading system.
The first step towards this would be implementing the Bali package in a balanced manner in keeping with the mandate of the Doha Development Round.
Whether the developed countries are ready and committed to this is moot.
*This article is written by Sunjay Sudhir, Consul General of India, Sydney, who was Counsellor at the Permanent Mission of India to the WTO between 2007-11. Views expressed are personal.