Nov 30, 2014

TFA deal at WTO - A victory for India?

I had blogged earlier about the matter regarding objection of India to sign Trade Facilitation Agreement(TFA) at WTO, as agreed at Bali ministerial. India has now agreed to sign the agreement as I had predicted in that post as one of the likely outcomes. However, when I see what is being signed, I wonder if it was worth to take the fight to this level. There is hardly much change, as far as I understand, from what could have been signed then, and what is being signed now, despite what our media projects as a great victory without any compromise. 

India's objection to TFA was linked to following issues:

  • that Agri negotiations (on public stockholding for food security purposes) are not going at the expected pace and direction. As Agri is part of the package, there is no meaning in signing only one part of the package, i.e. TFA, while the other part, i.e. Agri negotiation, is still in its infancy at the table. 
  • Specific inside the Agri negotiations, India had various issues, from the method of subsidy calculation, the base year taken as reference, the agreed cap on acceptable subsidies, and so on. These issues would take time to resolve and India wanted it to be fast paced. 
  • There was a peace clause in the agreement that lasted till 2017 and India was not happy with this, as in the lack of an agreement by 2017, one was not sure if the peace clause still holds. 
  • TFA being a bargaining chip, there is no point in throwing it away without getting some returns  at Agri negotiations. 
  • Indian farmers and poor developing countries would be adversely affected. 
At the same time, India had no objection to TFA text as such. Despite what the commerce minister of India claimed about the support it got on the above points by other LDCs or developing nations, there was absolutely no vocal or visible support.

After the visit of US Trade Representative Michael Froman earlier this month, India and US had resolved the differences, though not many details of it were shared with the media. 

And on 27th November, the TFA was agreed by all WTO members, with a "peace clause" in perpetuity for developing nations till an agreement on agriculture is finalised. The details on the peace clause is reproduced from WTO site below:


On 27 November, the General Council adopted decisions that would allow the trade facilitation text to go ahead, clarify the public stockholding proposal and allow work on it to continue and allow a programme for completing the Doha Round negotiations to proceed, almost six months later than originally envisaged.
On public stockholding, the “peace clause” was confirmed, but the way it was described was now firmer: members would “not” challenge these programmes legally under the Agriculture Agreement — the original decision said they would “refrain from” doing so. The conditions also remained unchanged: Governments seeking the shelter of the peace clause had to avoid distorting trade (ie, affecting prices and volumes on world markets) or impacting other countries’ food security, and to provide information to show they were meeting those conditions.
Members clarified that the “peace clause” would remain in force until a permanent solution was agreed, even if that meant going beyond the 2017 deadline. Although the reference to the 2017 Ministerial Conference remained, members also agreed to strive for a permanent solution by the end of 2015.

And the reading of above text is both heartening and disappointing. Disappointing because:
  • India, it appears, is ready to sign TFA without any firm assurance on Agri negotiations. A dilution from its earlier stand that without Agri, it won't give away TFA. Bargaining chip, Indian farmers, and concern for poor countries were all silently relegated under for unknown reasons.
  • Peace clause, though extended perpetually, is still challengeable under the guise of trade distortion or impacting other countries and such, as implied from copied text above. 
The heartening part is small. India could get the word "refrain from challenging" converted to "not" challenge when it comes to agri subsidies. So that means, others countries who would earlier "refrain" from challenging India's food security program, would now "not" challenge. Go figure. 

My point is simple:

If this is what India wanted, I don't think there would have been any objection during July. We could have had TFA much earlier, and avoided the chest thumping drama that Indian media creates every time India takes a stand at international level, stupid or otherwise, to support the stand. 

I am happy that we are signing TFA. Its needed urgently in India. 

Food security in India, as I understand, is in bad shape due to mismanagement and inefficiency in public administration and domestic policy making, than any capping clause arising from international agreements.