Is India being dogmatic at Bali

Updated: Dec 5 2013, 11:07am hrs
Even as the 9th Ministerial Conference of the WTO in Bali is under way, there is maximum likelihood of a failure to reach a consensus on a deal encompassing a small sub-set of Doha Development Agenda (DDA). That is, a deal primarily comprising a part of Agreement on Agriculture (AoA), Trade Facilitation Agreement (TFA) and a Duty Free Quota Free (DFQF) package for the LDCs. While the DDA is a small scope of the WTO and an even smaller is the scope of the current issues on anvil, pressure is being built to suggest that if the deal on these three aspects is not clinched, the very importance of the WTO as an institution would be in question. India, just as on earlier occasions, is being projected as a spoilsport.

The picture of the multilateral trade and trade-related regime, thus painted, is inherently flawed and misleading. Global trade negotiations, involving countries with varying stages of development, are bound to take time to conclude. Therefore, one more Ministerial meet, without a substantive outcome, does not announce a death-knell neither for the multilateralism nor for the WTO as a global trade institution. Panic to conclude a half-baked trade deal, bereft of real developmental concerns, in the name of so-called saving the WTO, would be erroneous.

Spurious would be the conclusion that it is India which has prevented the conclusion of the deal. If at all, Indian viewpoints are reflected in the coalition of the G33, representing several more countries. Countries like China, Brazil, Indonesia and Mexico, to name a few, have echoed Indias focus on development by expressing concerns over providing food security to the poor, binding commitments for implementation-related financial and technical assistance to countries needing special and differential treatment in the realm of trade facilitation, and meaningful commitments towards LDCs package on DFQF.

In addition, Indian leadership and negotiators have shown considerable flexibilities for clinching the deal by moving away from the single undertaking, whereby all the issues of the DDA should have been concluded to a position where only three aspects of the WTO agenda were to be negotiated. In that too, instead of making amendments to the AoA on provisions relating to the cap on subsidies which was based on the global economic realities of the 1980s, Indian negotiators showed flexibilities in terms of discussing the peace clause. The fact that Indias developmental imperatives are similar to several other developing nations and these have to be viewed by taking into account the current economic realities is a fair argument not just for India but also for those similarly placed. Providing food to the poor at affordable prices, while at the same time building food stocks at MSPs that are remunerative enough to the farming communities, is a developmental imperative in the developing world. With the upward revision in MSPs, given the domestic and global inflationary trends, the gap between MSPs and the price at which food is made available to the needy is bound to increase, and so is the food subsidy. This new reality needs to be taken note of and the 10% cap on subsidies as a proportion of total value of agricultural output should be revised in a dynamic setting, rather than keeping the reference prices of the decade of 1980s for calculating the ceilings of such developmental subsidies in a static manner.

One fails to understand why these developmental imperatives are considered as hurdles, and a country like India, championing this cause unless a permanent solution is reached, considered as blocking the deal while other countries fail to make several necessary binding commitments!

Ram Upendra Das

The author is senior fellow, Research and Information System for Developing Countries, Delhi.

Views are personal

In the current global circumstances, India, along with some major emerging economies like Brazil, South Africa and China, has to take the responsibility for safeguarding and strengthening the multilateral trade regime overseen by the World Trade Organisation (WTO).

This is because advanced economies, especially the US and those in Europe, have effectively given up on the multilateral trade regime. This is reflected in the spate of bilateral and regional trade pacts which the US and the EU are now pushing across the Atlantic and the Pacific region.

The US and EU are getting into a Trans-Atlantic Free Trade Agreement which will cover more than 50% of the global economy and trade. On the other side, the US is pushing strongly for the finalisation of the Trans-Pacific Partnership (TPP), which is a proposed trade and investment and services agreement between 12 Pacific rim countries of Australasia and South and North America. The TPP will pose a special challenge to the WTO regime because it is pushing for a high standard agreement, which will include all the emerging issues as well and could, therefore, lift the bar for future negotiations.

India is excluded from both these mega-regional trade deals and may find that it is frozen out of nearly two-thirds of global markets. Which is why India has the huge incentive to help strengthen the multilateral trade framework. To do that, even if India has to compromise a bit on some issues, it ought to do so and ensure that the drearily prolonged Doha Round is brought to a successful conclusion even if it is at a low level of ambition.

Almost 12 years have gone without any agreement at the WTO. The global trade framework is in a weak position now. If no agreement is reached in Bali, everyone will lose faith in the WTO, which may well face an existential problem. This is not good for India and other emerging and developing nations.

India is being projected as the country that is opposing an agriculture agreement. If a deal on agriculture is not clinched, then there will be no other agreements including the pact on trade facilitation that is expected to boost trade by $1.3 trillion. So, the question is, can India change its position so that there is an agreement at Bali

In my view, India has thankfully achieved food security and the country no longer depends much on subsidies. The country has 60 million tonnes of foodgrains in store and, in all likelihood, will boost its agriculture output this year and the next. What India should strive for is improving productivity and unshackling the supply constraints. If this is done, the country will not just have surplus grains to export but can also rein in food inflation.

The Aadhaar-based direct benefit transfer, once fully operational, can do wonders for transferring subsidies online, cutting wastages and leakages and reducing the subsidy bill while ensuring food security. So, food security certainly should not and cannot be a non-negotiable issue for India at the WTO.

In this context, it will be wiser for Indian leaders to compromise a bit on agriculture so that there is a bigger agreement at Bali. This will preserve the multilateral trade regime and project India as a strong and mature player on the global trade negotiating table.

Rajiv Kumar

The author is senior fellow, Centre For Policy Research

(As told to Raj Kumar Ray)