WTO and food stock holding row: Why India must strengthen world body

Published: December 16, 2017 2:22 AM

WTO’s 11th Ministerial Meeting ended on December 13 in Argentina, without any negotiated agreement on substantive issues.

WTO, Argentina, Ministerial Decisions, US, WTO discussions, Food stock holding row
WTO’s 11th Ministerial Meeting ended on December 13 in Argentina, without any negotiated agreement on substantive issues. (Image: IE)

WTO’s 11th Ministerial Meeting ended on December 13 in Argentina, without any negotiated agreement on substantive issues. The Ministerial Decisions taken are on continuing work in certain areas, and renewal of two previously agreed Decisions which have been reiterated every Ministerial meeting. The negotiations on agriculture, including food stockholding, were blocked by the US, the largest global economy and the second-largest agriculture trader in the world. The US made two significant points in the context of this Ministerial. One, that the focus in WTO discussions should be on improving the system. Two, the era of consensus-based multilateral agreements in WTO is over. Now, substantive results are possible only in the form of plurilateral agreements, i.e., agreement among a limited number of members rather than the entire WTO membership. Food stockholding (FS) has been a major focus of India in WTO negotiations. There are two different views in India. One is that we already have the peace clause as a permanent mechanism and thus there is no need to emphasise the permanent solution. A very different view is that if we do not get a WTO permanent solution on FS, it will be a disaster for us. Both these views are not based on a complete consideration of the issues involved.

In response to the first view, a recent article by TS Vishwanath in these pages (goo.gl/2BXKhv) gives a number of reasons why India’s emphasis on FS in WTO negotiations is valid and necessary. Vishwanath mentions the importance of coalition-building at WTO and that, politically, India needs to support an issue which others are emphasising as well; India cannot move away from the debate because that would allow asymmetry of support that present rules have in favour of developed economies; and, that WTO members must honour their commitment to reach a permanent solution for food stockholding by December 2017, and India must press for this commitment to be met. Two other important reasons mentioned for seeking a permanent solution are that “there is no guarantee that countries cannot renege on their promises” under the peace clause, and that “there is an urgent need to get a legal backing to the Bali Peace Clause of 2013 and the subsequent Geneva Decision of 2014 on the permanency of the Peace Clause”.  While I agree with most of the points above, some need to be qualified or clarified, and some new ones provide a more comprehensive picture. First, a clarification.

The Geneva Decision on the Peace Clause provides a permanent window for us. It is not an interim solution. It is interim in the sense that it gives India and other countries the legal cover to use the policies covered by the Peace Clause, till the time that a permanent solution is negotiated on this. Till that time, the peace clause remains a valid legal basis just like any other WTO clause.  In this background, it is not required to negotiate another legal clause on the grounds that countries may renege on the existing solution. Any existing legal clause or a new one that is negotiated is subject to challenge or countries reneging on them, including any future permanent solution. All dispute settlement challenges in the WTO are actually against existing legal clauses, on the grounds that the country so challenged has breached its obligations or concessions under that provision. Despite this, it is completely valid for India to emphasise the permanent solution at WTO negotiations. Though India has a permanent peace clause, it is strategically correct for India to try and improve its content through negotiations on a permanent solution.

This adds to the fact that WTO members had agreed to negotiate a permanent solution by the time of the 11th Ministerial meeting. Thus, the important improvement achieved by the permanent solution would not be the feature of permanence but its potential content and coverage of policies allowed by WTO. Since India has a peace clause that provides a minimum level of insurance, it has the possibility of negotiating a better content for the permanent solution or staying with the existing peace clause.  Such an aim to improve the situation is even more relevant when we consider that food stockholding is among a number of issues on WTO which negotiations were being conducted. A solution within a negotiation involves countries accepting certain request from others in return to what they themselves are seeking. Therefore, any topic which needs to be negotiated and further improved has a better possibility of success when there is more than one issue being negotiated.

Furthermore, it is important to continue to emphasise at WTO, a politically and socially relevant issue like food stockholding, which is focused on helping poor consumers. This is even more relevant when some major economies are not at all keen on engaging in the discussions/negotiations, so that the issue remains alive.
Thus, even if the we have a permanent, legally binding peace clause, emphasis on negotiating a permanent solution is valid both because WTO members had agreed to negotiate such a solution, and this is the only way to get a better result on the issue. Historically, the coalition building on this topic has been more due to the efforts of India than the interests of others.

Importantly, when we negotiate any issue at WTO, we must also be clear on the trade-off that we are willing to make, i.e., what aspect of the topics emphasised by others we would be willing to accept in return for others to accept what we are emphasising. Such a strategy is important even if we are not in favour of making a formal connection of this kind in the negotiations. This approach would be important also to ensure that we keep strengthening the multilateral trading system (i.e. WTO) because a complete failure, including lack of any discussion of issues that affect our international trade opportunities, would weaken a system which is of use for India as well as the global trade community.

Harsha Vardhana Singh (Executive director, Brookings India. Views are personal)

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