WTO impasse: India wanted relief on subsidy to carry on, walk towards solution

Written by ENS Economic Bureau | New Delhi | Updated: Aug 2 2014, 13:44pm hrs
Kerry-Modi-USPM Narendra Modi with US Secretary of State John Kerry and US Secretary of Commerce Penny Pritzker during a meeting in New Delhi. (PTI)
The WTO talks on trade facilitation agreement collapsed as the member nations did not agree with the new proposal India had suggested for breaking the impasse.

According to the new proposal, which was within the contours of original one, India had suggested that the interim relief on breach of the 10 per cent subsidy cap should continue till perpetuity or even after the 11th ministerial till a permanent solution is found, while there should be enhanced process to find a permanent solution by December 31, an official told The Indian Express.

The interim relief, called the peace clause, ensured that until a permanent solution was found, developing countries, including India, could continue with their public food stockholding programmes without being challenged through the WTO dispute settlement mechanism in case they breached the 10 per cent limit prescribed by the WTO.

The official said that the peace clause, which expires after four years, should continue beyond the 11th ministerial scheduled in 2017, because our problem is that we dont need a peace clause right now as we are not defaulting right now. We need it after 2-3 years as we are very close to the 10 per cent subsidy cap especially in two crops wheat and rice.

So we proposed on July 30 that we wanted a general council (GC) decision on peace clause. We proposed that peace clause should continue till perpetuity or even after the 11th ministerial of WTO. We asked for an enhanced process for finding a permanent solution by December 31, a deadline which should be adhered to for all least developed countries issues as well, the official said explaining that India maintained that the trade facilitation agreement (TFA) should get finalised along with the other issues of the Bali package.

Last December, during the ninth ministerial in Bali, it was agreed that TFA will be signed into a protocol by July 31, 2014, and fully implemented by July 2015. It was also agreed that a permanent solution towards food security would be achieved by 2017 and in the interim, peace clause would be implemented to protect the interest of developing countries.

GC is the highest decision-making body of WTO that meets between two ministerials. The decisions made by the GC are legally binding on WTO members.

Early morning on Thursday, India presented its legally-vetted draft to its ambassador who shared it with WTO director general Roberto Azevedo. When the DG discussed Indias new proposal to the member nations, it was received with mixed feelings as the members raised issue over the demand for a GC statement on peace clause.

However, despite hectic negotiations, a consensus on New Delhis proposal remained elusive. Just two hours before the deadline for ratifying the trade facilitation agreement was set to expire, Azevedo informed the member nations of the failure to conclude the customs deal.

We dont think any damage has been done, the bluff of scaremongering has been called off. We will reach out to LDCs and we have a sense that there are undercurrents of relief from the poor nations. Bali package has not collapsed, it has just got delayed, the official said.

The official added that Cuba, Bolivia and Venezuela have said that they will block the TFA protocol while Zimbabwe and South Africa are also contemplating the same.


July 25: India makes a statement, calls for concluding the whole Bali package TFA, food security and LDC development issue, together

July 27: WTO DG speaks to commerce and industry Nirmala Sitharaman, proposes to offer suggestion in personal capacity

July 28: Late afternoon, DG sends his personal proposal, giving a specific work programme for food security

July 29: India studies DGs proposal, offers a new proposal

July 30: Provides draft of Indias new proposal to ambassador

July 31: New proposal is presented to DG who discusses it with member nations; nations disagree with the proposal and TFA protocol fails to get ratified