India compromises on WTO deal

Under pressure from the US, it accepts conditions not part of G-33 proposal

By Soma Basu
Published: Tuesday 31 December 2013

Bali accord relaxes the conditions imposed by WTO on agriculture subsidies

THE World Trade Organization (WTO) reached its first-ever trade reform deal in Bali on December 7 after India mellowed its stand on agriculture subsidies.

The deal, which was struck with the approval of 159 ministers, facilitates trade and allows developing nations to stock grains for food security purposes. This is the first significant global trade reform in more than two decades and comes at a time when WTO seems to be losing relevance after a series of failures to conclude trade negotiations. The Bali accord would help the UPA government roll out its flagship National Food Security Act, passed in September 2013, which would otherwise have been severely constrained by current WTO rules that impose stiff conditions on agriculture subsidies.

Though India was firm on its stand on subsidies till the last moment and its Minister for Industry and Commerce Anand Sharma insisted that “food security was a non-negotiable issue and he would prefer no deal to a bad deal”, the text of the final accord shows India’s compromised position.

Industrialised countries, including the US and European Union members, had been asking India to accept a “peace clause”, which offered four years of immunity from penalties imposed for breaching the farm subsidy cap of 10 per cent under the Agreement on Agriculture (AOA). But India and other developing nations wanted the peace clause until a permanent solution was found to the issue of farm subsidy for smooth implementation of their food security programme.

Civil society groups claim that India wilted under pressure from the US and agreed to accept conditions that were not part of the G-33 (a coalition of developing countries) proposal.

In the G-33 draft, India had demanded that no member country can drag another member to the dispute settlement mechanism till a permanent solution is found under AOA and Agreement of Subsidies and Countervailing Measures (ASCM).

The latest ministerial draft agreement says, “...members shall refrain from challenging through the WTO dispute settlement mechanism... of the Agreement on Agriculture in relation to support provided for traditional staple food crops in pursuance of public stock holding programme for food security purposes”.

Thus, the Bali accord covers only AOA and not ASCM. “This means that member states can still drag India to the dispute settlement process under ASCM,” says Anuradha Talwar, adviser to the Supreme Court commissioners for Right to Food.

Further, WTO members have agreed to allow the G-33 nations to put in place an “interim mechanism” till there is a final solution to the stand-off regarding public stock holding. According to Talwar, the word “interim” that Sharma had used in Bali in the context of food subsidy and public stock holding is in the draft text. But the US’ position that the interim measure should be only for four years also finds place in the text, which mentions, “…for adoption by the 11th Ministerial Conference”. There is a WTO ministerial meet once every two years and Bali was the 9th.

The Bali accord marks a significant improvement from what was on the table in Geneva in November this year, says Abhijit Das, head of the Centre for WTO Studies of the Indian Institute of Foreign Trade. Ministers from WTO member countries held talks in Geneva in the run-up to the Bali summit, but failed to agree on the guidelines and rules that could have led to the deal.

The accord also requires developing countries to periodically notify WTO and its members on their food programme to keep it “transparent”. Experts fear the process will not only be complex for a country as diverse as India but will also unnecessarily open India’s programmes for external scrutiny.

V S Vyas, member of the Economic Advisory Council to the Prime Minister, on the other hand, says, “It is anyway not possible to reveal something in our country and hide it from another country.”

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