The failure of the two major players in global trade negotiations to bridge their differences has put paid to the adoption of the protocol of amendment for implementation of the contested Trade Facilitation Agreement (TFA) for the time being. 

India and the United States failed Thursday at the World Trade Organization (WTO) to reach agreement on construction of a legally binding decision on a “permanent peace clause” that would further strengthen what was decided for public distribution programmes for food security in developing countries at the ninth ministerial meeting in Bali, Indonesia, last year.New Delhi made its choice clear to Azevedo: either members [of the WTO] agree to a permanent solution for food security or postpone adoption of the TFA protocol until there are credible outcomes on all issues, by the end of the year.

The Bali decision on food security was one of the nine non-binding best endeavour outcomes agreed by trade ministers on agriculture and development.

For industrialised and leading economic tigers in the developing world, the TFA – which would harmonise customs procedures in the developing world on a par with the industrialised countries – is a major mechanism for market access into the developing and poorest countries.

WTO Director-General Roberto Azevedo, who had put all his energies over the last seven months into ensuring the timely adoption of the TFA protocol by July 31 as set out in the Bali ministerial declaration, was clearly upset with the failure to adopt the protocol.

“The fact we do not have a conclusion means that we are entering a new phase in our work – a phase which strikes me as being full of uncertainties,” Azevedo told the delegates at the concluding session of the General Council, which is the highest WTO decision-taking body between ministerial meetings.

The Bail ministerial declaration was adopted at the WTO’s ninth ministerial meeting in December last year. It resulted in a binding multilateral agreement on trade facilitation along with non-binding outcomes on nine other decisions raised by developing and poorest countries, including an interim solution on public distribution programmes for food security.

The developing and poorest countries remained unhappy with the Bali package even though their trade ministers endorsed the deal. The countries of the South resented what they saw as the “foster parent treatment” accorded to their concerns in agriculture and development.

While work on clearing the way for the speedy implementation of the TFA has preceded at brisk pace at the WTO over the last seven months, other issues were somewhat neglected. Several African and South American countries, as well as India, remained unhappy with the lack of progress in issues concerning agriculture and development, particularly in public distribution programmes for food security.

Last week, India fired the first salvo at the WTO by declaring that unless there are “credible” outcomes in the development dossier of the Bali package, including a permanent solution for food security, it would not join the consensus to adopt the TFA. Bolivia, Venezuela and Cuba shared India’s concerns.

Despite concerted political lobbying by leading U.S. administration officials and envoys from Western countries in New Delhi to change its stand, the Indian government informed the WTO director-general Wednesday that it wanted a substantive outcome on food security, without which it would oppose the TFA protocol.

Without bringing India and the United States into a face-to-face dialogue at the WTO, Azevedo held talks with the representatives from the world’s two largest democracies in a one-on-one format.

According to sources familiar with the WTO’s closed-door consultations, Azevedo informed India that its demand for a substantive outcome on food security would not be acceptable to members because they would not approve “re-writing” the Bali ministerial declaration.

New Delhi made its choice clear to Azevedo: either members agree to a permanent solution for food security or postpone adoption of the TFA protocol until there are credible outcomes on all issues, by the end of the year.

“India’s position remains the same,” New Delhi trade minister Nirmala Sitharaman told reporters after a meeting with the U.S. Commerce Secretary Penny Pritzker Thursday.

Given the importance of TFA for U.S. business interests, Washington yielded some ground by agreeing to a compromise, but the two sides were stuck on legal aspects, particularly on how this should be adopted at the General Council.

The result Thursday was that the differences between the two led to an adjournment of the General Council without the TFA protocol.

“We have not been able to find a solution that would allow us to bridge that gap,” the WTO director-general told members.  “We tried everything we could … but it has not proved possible,” Azevedo said.

“We are absolutely sad and disappointed that a very small handful of countries were unwilling to keep their commitments from the December conference in Bali and we agree with the director-general that the failure has put this institution on very uncertain ground,” U.S. deputy trade representative Ambassador Michael Punke told reporters.

Brazil’s trade envoy Marcos Galvao suggested that it would be possible to reinvigorate the talks despite the failure Thursday. “When we come back in September, we can come forward with the Bali package and the whole work programme,” Galvao told IPS.

In New Delhi, U.S. Secretary of State John Kerry said “our feeling is obviously that the agreement that was reached in Bali is an agreement that importantly can provide for food security for India.”

“We do not dismiss the concerns India has about large numbers of poor people who require some sort of food assurance and subsistence level, but we believe there’s a way to provide for that that keeps faith with the WTO Bali agreement,” Kerry maintained.

Credible and permanent rules for food security are vital for developing countries to continue with their public distribution programmes to address livelihood security.

“The programme enables governments in the developing countries to put more money in the hands of the poor farmers by buying their crops at stable and higher price, and use those government purchases to feed the hungry – many of those same farm families – with free or subsidised food distributions,” said Timothy A. Wise, an academic with the Global Development and Environment Institute at the U.S. Tufts University.

Several developing and poorest countries – Zambia, Ghana, Malawi, Senegal, Kenya, Nigeria, Egypt, Morocco, Tunisia, Botswana, Sri Lanka, Bangladesh, Nepal, Jordan, India, and Saudi Arabia – are currently implementing food security programmes for different food articles.

The Bali package involves nine issues in addition to the TFA and they need to be addressed “on an equal footing,” Nelson Ndirangu, Kenya’s senior trade official told IPS. “I’m sympathetic to India’s stand and I agree that all issues, including a permanent solution for food security, must be addressed along with the TFA,” said Ndirangu.

(Edited by Phil Harris)

A group of developing countries brought a tectonic shift at the World Trade Organization on Friday by turning the tables against the industrialised countries, when they offered a positive trade agenda to expeditiously arrive at a permanent solution for food security and other development issues, before adopting the protocol of amendment of the contested Trade Facilitation Agreement.

Bolivia, Venezuela, Cuba and India inflicted a huge blow on the dominant actors in global trade by refusing to join consensus on the protocol required for full implementation of the TFA that is being pushed through the WTO with carrots and sticks.

“This is unimaginable, that New Delhi would decide the fate of decisions at the WTO, which has been a preserve of the United States and the European Union for the last 50 years,” said a trade envoy from a Western country.The mismatch, in terms of progress, between the TFA on one side, and lack of credible movement in agriculture and development on the other, especially in arriving at a permanent solution for public stockholding programmes, has come into the open at various meeting in Africa and elsewhere

Only seven months ago, the industrialised countries were triumphant at the WTO’s ninth ministerial meeting in Bali, Indonesia, after having succeeded in clinching the TFA. At one go, that agreement would harmonise customs procedures in the developing world on a par with the industrialised countries. It would offer enhanced market access for companies in the rich and leading developing countries such as China, Korea, Hong Kong and Singapore.

According to former WTO Director-General Pascal Lamy, the TFA would cut tariffs in developing countries by 10 percent

The developing and poor countries, in return, were offered half-baked outcomes in the Bali package on agriculture and development, including an interim mechanism for public stockholding for food security with a promise of a permanent solution in four years, an agreement on general services in agriculture, transparency-related improvements in what are called tariff rate quota administration provisions, and most trade-distorting farm export subsidies and export credits.

The poorest countries, as part of the “development” dossier, secured a set of best endeavour promises concerning preferential rules of origin for exporting to industrialised countries, preferential treatment to services and services suppliers of least developed countries, duty-free and quota-free market access for least-developed countries, and a final monitoring mechanism for special and differential treatment flexibilities.

The TFA has witnessed perceptible progress since the Bali meeting, while other issues raised by developing and poor countries have taken a back seat at the WTO.  The mismatch, in terms of progress, between the TFA on one side, and lack of credible movement in agriculture and development on the other, especially in arriving at a permanent solution for public stockholding programmes, has come into the open at various meeting in Africa and elsewhere.

“Even seven months after Bali, we do not have the required confidence and trust that there will be constructive engagement on issues that impact the livelihood of a very significant part of the global population,” Indian Ambassador Anjali Prasadtold WTO’s General Council, which is the organisation’s highest decision-making body, during the ministerial meetings, on Friday.

Prasad said “the Trade Facilitation Agreement must be implemented on as part of a single undertaking including the permanent solution on food security.” Bolivia, Cuba and Venezuela took the same stand as India that all issues in the Bali package have to be implemented on the same and equal footing.

“Nothing is agreed until everything is agreed in the Bali package,” India’s trade minister Nirmala Sitaraman told the Financial Times last Friday.

Against this backdrop, India finally pulled the plug at the General Council meeting by saying that “the adoption of the trade facilitation protocol be postponed until a permanent solution on public stockholding for food security is found.”

Without the protocol, it is difficult to undertake rapid liberalisation of customs procedures as set out in the TFA.  Effectively, the Indian stand has put paid to an early adoption of the trade facilitation protocol.

“Today, we are extremely discouraged that a small handful of Members in this organization [WTO] are ready to walk away from their commitments at Bali, to kill the Bali agreement, to kill the power of that good faith and goodwill we all shared, to flip the lights in this building back to dark,” Deputy U.S. Trade Representative Ambassador Michael Punke lamented at the General Council meeting.

Trade envoys from Japan, the European Union and a group of 25 industrialised and developing countries slammed India for its move to oppose the TFA until all other issues, particularly, the permanent solution on food security, are resolved.

“But the TFA cannot be divorced from the other issues, including food security, which need to be converted into a binding agreements on a priority basis,” India’s former trade envoy Ambassador Jayant Dasgupta told IPS Saturday.

Dasgupta, who played a major role in providing the rationale for exempting public distribution programmes for food security from WTO disciplines, offered several reasons why food security must trump over the hard core mercantile trade agenda embodying the TFA.

First, he said, ” the debate on food security exposed the insensitivity of trade negotiators of some major industrialised countries (pushed by seven or eight transnational corporations that dominate global food trade) to address food security issues, arising out of static interpretations of trade rules framed many decades ago, when such problems were not conceived.”

Second, the objections raised by the United States, Canada and Australia in addressing food security  are unacceptable because they do not want to concede that there has been more than 650 percent inflation in India since 1986-88.

The WTO agreement on agriculture uses the references prices of 1986-88 for determining domestic support commitments. “Any economist worth his salt would be aghast at the idea that the calculation of subsidies should take place without reference to the current market prices but to market prices which existed twenty six to twenty eight years,” the former Indian trade official argued.

Third, the problem of public procurement and stockholding for food security purposes is resorted to by not only India, but China, Indonesia, Philippines, Pakistan, Egypt, Jordan, Nigeria, Kenya and many other developing countries.

“Because of the way the agreement on agriculture provisions is worded, most of these developing countries could be held to be in violation of the WTO rules,” said Dasgupta, pointing out that “India is articulating not only its own problems but also those of other developing countries.”

And fourth, “by seeking to push India into a corner on this extremely sensitive issue for many developing countries, the United States and its handful of supporters are seriously jeopardising the credibility of the WTO in terms of latter’s ability to correct its mistakes and to be sensitive to the needs of a majority of its developing members.”