WTO: Bali ministerial

Defeat in Bali

Print edition : February 07, 2014
The Bali ministerial of the WTO ignores the original development agenda of the Doha Round, but India proclaims as victory an unfair deal meted out to it.

The meeting of Trade Ministers from 159 member countries of the World Trade Organisation (WTO) in December in Bali, Indonesia, managed to revive global interest in the deadlocked Doha Round launched. But a closer look at what was achieved there shows that not only have members digressed from the original course of the Doha Round, but the development agenda, which was its cornerstone, too has disappeared into thin air.

The subsidy question

A simple request made by India and other developing members of the G33 alliance to delete subsidies given on account of public stockholding programmes from the category of actionable subsidies met with mammoth resistance from developed countries.

Given the fact that this request, if granted, would allow developing countries to give price support to poor farmers and also help implement their food security programmes without facing retaliatory action, developed countries should not have had any problem in going along with it. But the United States, the European Union and many others raised a hue and cry claiming that the provision would distort global prices, without paying heed to India’s assurance that crops obtained through the programme would not be released in the international market.

Double standards

When one takes into account the $100-billion-worth of farm subsidies given annually by the U.S. and an equal amount given by the E.U. countries, India’s food security programme, valued at $20 billion, is a pittance. But the argument did not seem to make any sense to the developed world. The unfairness of the existing regime that calculates subsidies on the basis of market prices prevailing in 1986 was also ignored.

All that India and the G33 managed to get in Bali was an interim assurance that legal action would not be taken if food subsidies exceeded the prescribed levels of 10 per cent of the total farm production value and that the matter would be reviewed again after four years.

The interim relief, however, comes ridden with a number of obligations, including furnishing reams of data on the country’s agriculture production, food consumption and various subsidies. The relief would also be null and void if developed countries deemed that the subsidies were distorting global prices.

Poor countries lose

In return for the cosmetic gain in the area of food security, India had to give its consent to a pact on trade facilitation, which would largely favour developed countries whose infrastructure is much better than that of poorer countries. The pact places an obligation on all members, especially developing countries, to upgrade infrastructure at ports and put in place structures to facilitate the movement of goods across borders.

While India was already upgrading infrastructure on its own, the pact may result in developed countries dictating how it goes about the task and the pace with which it moves as delays could result in penalties.

Now that India has lost its most powerful bargaining chip, it has to be doubly cautious when members come together again to discuss other issues under the Doha Round. It has to especially steer away from areas such as investment and environment where it can be arm-twisted into agreeing to concessions that it has been avoiding so far.

But more importantly, India’s political class has to realise that proclaiming as victory an unfair deal meted out to the country does not augur well for its future in the multilateral forum.

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