The just concluded World Trade Organisation (WTO) meet in Bali has drawn varied comments, from outright rejection by the civil society in India, to euphoria by the UPA government. The director general of WTO concluded in these words, “For the first time in our history the WTO has truly delivered. We have put the world back into the WTO”, and went on to quote the late Nelson Mandela (he was still alive at the time of the meet), “It seems impossible until it is done”. But Indian civil society groups are “extremely disappointed” about India accepting a “peace clause” with conditions imposed on its food and farm subsidies, and offering no assured mechanism for a permanent solution.
They are unhappy about India opening up its farm and domestic food policies, projects and mechanisms to global scrutiny with large data and reporting machineries to be put into place, thereby losing sovereignty.
The Alliance for Sustainable and Holistic Agriculture expressed “deep disappointment” with the hype over “India’s win”, as publicly touted by commerce minister Anand Sharma, who led the Indian delegation in Bali. It said “India has lost a historical opportunity” of correcting deep-seated problems with the WTO on trade and agriculture rules that were tilted against the developing countries.
The Right to Food Campaign fears that the entire question of grain procurement, based on the hitherto prevailing minimum support price (MSP) mechanism would become very vulnerable, as the country will breach the subsidy limit, as calculated by the, Aggregate Measure of Support (AMS), as defined in the Agreement on Agriculture (AOA) at the Doha WTO meet earlier. The director of the Gene Campaign, a vocal agricultural scientist and also a social activist, Dr Suman Sahai, pointed out that India fell into the trap of discussing subsidy limits and minimum support in agriculture, when it ought to have argued on the basis of hunger and malnutrition, and that any effort by the Indian government to act on it cannot be possibly placed within the ambit of WTO sanctions.
Against the background of all these fears and criticism, one must critically yet dispassionately attempt to answer the following questions:
Is it a historic deal?
The Bali round of WTO is historic because the organisation has reached its first ever global trade reform deal, approved by 160 ministers after 12 years of stuttering through negotiations. The conference has successfully managed to push for a deal, which while representing a tiny fraction of what was set to be inked in the Doha round of talks stalled since 2001, paves the way for significant trade reforms. Cuba which had threatened to veto the package of measures as it didn’t include a subtraction of the US embargo, relented on its stance last minute, paving the way for the deal to be clinched according to Reuters. This agreement rescues the WTO from a threat of obsolescence anticipated with several regional trade pacts being pursued by countries individually.
What does it do to global trade?
The deal seeks to lower barriers to trade through a global trade facilitation agreement that seeks to reduce red tape, cut costs and improve efficiencies by taking measures like digitisation of procedures. Some estimates suggest the deal could boost global gross domestic product by $1 trillion, increase exports by $570 billion and create 20 million jobs for developing countries.
What about India’s food security concerns?
India, represented by Anand Sharma, fought a hard battle, sticking to his guns on a no compromise on food security. After the deal the WTO’s Agreement on Agriculture that seeks to limit market distorting subsidies given to farmers at 10% of total production would not come in the way of India’s domestic food subsidy initiatives. Neither would a 4-year peace clause (which gave interim relief) that India had earlier relented to, but subsequently backed out to hold. India must however notify the WTO’s committee on agriculture that it is at risk of breaching the “de minimis” (support) level or the minimum amount of domestic support that can be given by a country to its farmers. Anand Sharma has said there was “imminent danger of breaching the level in the near future”. I would think this is the “real danger zone” for India, because, as I see it, whichever government sits in New Delhi post-May 2014 general election, it would simply be impossible to mop up all the grain needed to put in place the Food Security Act (FSA), an ordinance passed recently by Parliament, in haste, without giving due consideration to the economics of it.
What’s in it for Least Developed Countries?
The package for least developed countries (LDCs) includes allowing their exports easier access to developed country markets through the following means—preferential rules of origin for least-developed countries, operationalisation of the waiver concerning preferential treatment to services and service suppliers of LDCs, duty-free and quota-free market access for LDCs. A deal has also been reached on cotton from LDCs with a view to both improving market access for cotton products from least developed countries, and with development assistance for production in those nations that is most important to countries like Benin in Africa, whose main economic stay is cotton.
Who made this possible?
WTO director-general Roberto Azevedo is the man of the moment. Brazilian diplomat Azevedo was elected to succeed Pascal Lamy as director general of the WTO in May 2013 and assumed office barely months ago in September. Azevedo thrashed out the historic deal over three months of late night negotiations, managing a feat that had eluded his predecessor Lamy and four others right since the inception of the WTO in 1995. Azevedo’s candidature was seen as giving developing nations a voice at the WTO since it was historically always headed by members of the Bretton Woods system. The successful culmination of the Bali round further cements the belief that WTO has finally acknowledged the shifting balance of power.
I would, however, add a tail piece: Proof of the Bali pudding would be in the eating—let us wait and watch.
(The author is an international agricultural scientist and can be reached at email@example.com)