The day after, India agrees to re-engage on WTO pact

Written by fe Bureau | New Delhi | Updated: Aug 2 2014, 10:03am hrs
Narendra ModiPM Narendra Modi with US Secretary of State John Kerry (c) and US Secretary of Commerce Penny Pritzker and Sushma Swaraj. (PTI)
A day after its firm stand on food security put the multilateral process at the World Trade Organisation to liberalise global trade in jeopardy, India has vowed to help the same and suggested efforts to build a consensus on all outstanding issues could be resumed in September. New Delhi agreed to re-engage in the talks for both trade facilitation and permanent solution for food security but said during the period of negotiation it would need the comfort of the promised peace clause being surely available.

The peace clause is meant to give developing countries immunity on any violation of limits on public stockholding for food security.

As the US blamed India for the failure of WTO talks, Prime Minister Narendra Modi on Thursday said developed countries should understand the challenges of poverty in developing nations and their governments' responsibilities to address them.

Modi conveyed this to visiting US secretary of state John Kerry and secretary of commerce Penny Pritzker when they called on him.

The Prime Minister emphasised the need for developed countries to understand the challenges of poverty in developing countries and their governments' responsibilities in addressing them when discussions take place in international forums, a PMO statement said.

Sources said during the negotiations at the world body's general council on Thursday, India insisted on an enhanced process to find a permanent solution for the food security issue by December 2014. This should necessarily be in the form of a General Council decision, India said. However, all that India was offered was a text incorporating these proposals from India by the WTO director general, which, sources here said, led to the collapse of the talks. The chair's text only had the value of a record of the discussions, sources explained, and is not legally binding like a General Council decision.

In fact, India had even agreed to sign the protocol on trade facilitation agreement (TFA) on Thursday itself if these proposals were accepted by all members and the General Council came out with a text to this effect, officials added.

Kerry said India's decision not to ink the TFA protocol sent a wrong signal.

WTO director-general Roberto Azevdo said on Thursday night that despite intensive consultations, the world trade body's 160 members could not find a solution that would allow them to bridge the gap on the adoption of the TFA protocol. The TFA can potentially add $1 trillion to the world economy and create over 20 million jobs.

In its July 25 statement before the General Council, India suggested a four-point course of action including setting up a Special Session of the Committee on Agriculture to ensure clear-cut procedures, timelines and outcomes to arrive at a permanent solution on food security as well as on LDC issues by December 31, 2014.

New Delhi had also sought a review of the progress of these accelerated discussions in October 2014 by the General Council.

On agriculture, the key issue is public stockholding for food security purposes. WTO norms say public stockholdings cannot be over 10% of the value of foodgrains produced. India is challenging the calculation of public stockholding at the base price of 1986-88, citing inflation and currency fluctuation since then, and therefore wants the base year to be changed.

India also pushed for calculation of domestic subsidies on an inflation-indexed basis. Experts have differed on whether the peace clause, as per the Bali agreement, is valid beyond the 11th ministerial conference slated for December 2017, but agreed that it will stay despite the current deadlock.

Peace clause will stay as agreed. However, it is valid only till 2017. There is no peace clause after that whether or not the members find a permanent solution, said Anwarul Hoda, previously WTO deputy director general and currently chair professor at think tank ICRIER.

However, Abhijit Das, head and professor, Centre For WTO Studies, IIFT, said, Regarding peace clause, a very clear decision already exists which is unrelated to any progress on other Bali issues. The deadline of July 31 being breached in respect of TFA protocol will not adversely affect the peace clause. Also, I do not subscribe to

the view that if there is no decision by 2017, the peace clause might expire.