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India’s “Suicidal” Stance on Food Subsidies Could Undermine Global Trade Reform

Posted July 28, 2014

India hardened its stance on the proposed Trade Facilitation Agreement (TFA) with a strongly worded statement at the World Trade Organization (WTO) general council meeting in Geneva last Friday that it will not agree to the new trade accord unless its food security demands are addressed with greater urgency.

India said that a solution to the food subsidies issue was “important because millions of farmers and poor families depend on domestic food stocks do not have to live in constant fear. To jeopardize the food security of millions at the altar of a mere anomaly of rules is unacceptable.”

Unlike the negotiations concerning food security and public stockholding that are to be concluded by 2017, the deadline for adoption of the TFA’s protocol (i.e., converting it into a legal document) is July 31, after which WTO members will have one year to ratify it for implementation by July 31, 2015. Some estimates say the WTO’s first ever global trade agreement could add $1 trillion to the world economy and create 21 million jobs.

India’s statement indicated that while it views timelines as important, “we cannot afford to act in haste in the WTO ignoring concerns expressed by members.” It reiterated the position of the Indian government that links signing the TFA with a resolution to the food security issue. “Let the TFA protocol be postponed till a permanent solution on public stockholding is found,” said the statement.

Several countries responded to India’s intransigence saying that a failure to agree on the TFA deal will be a damaging blow to the WTO. They warned that failing to seal the trade facilitation deal would unravel the whole package of trade agreements done in Bali, effectively destroying the chance of further global trade reform, something that India has long demanded. “A decision to step away would be in no one’s interest. It would seriously undermine the ability of the WTO to deliver for the future,” a group of 25 countries including Thailand, Malaysia, Vietnam, Pakistan and other developing nations said in a statement.

The European Union issued a similar warning, saying “a great opportunity to mobilize trade as an instrument for growth and development would be lost, and the credibility of the WTO, which has during the financial crisis proven its value as a firewall against protectionism, would be further damaged.” One Western diplomat cited by Reuters went so far as to say: “It will be suicidal, absolutely. And that’s not a threat, that’s just a statement of fact.”

Some trade experts think that if global trade negotiations lose momentum again, many WTO members, including the European Union and the United States, will effectively give up and focus all their efforts on more ambitious trade reforms that they are already negotiating bilaterally and in small groups. Those include regional deals such as the Trans-Pacific Partnership and the EU-U.S. Transatlantic Trade and Investment Partnership, as well as sectoral negotiations in areas such as services, information technology and environmental goods.