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)

Second day of the WTO's ministerial conference in Bali, Indonesia. Credit: © WTO/ANTARA

By Ravi Kanth Devarakonda
BALI, Dec 4 2013 (IPS)

The World Trade Organisation’s ninth ministerial meeting at Bali, Indonesia has morphed into a fierce battle between the countries seeking social safety nets for hundreds of millions of poor people and those insisting on having advanced import-facilitation programmes in the developing countries on par with the industrialised nations.

These two narratives openly clashed at the plenary meeting Tuesday. “Millions of people depend on food security and millions of people are going to see what will be done on this vital issue,” Kenya’s foreign minister Amina Mohamed told IPS.

“In Africa there are millions of people who need food security and they are all waiting to see if the ministers in Bali are going to be sensitive as an international community to the livelihood and survival concerns of the most vulnerable people,” she said.

She urged the trade ministers “to come up with a solution to send a message that we heard what you are saying and that we want to support your issue and we acknowledge food security is a vital issue.”

India’s trade minister Anand Sharma said at the plenary meeting that “Food security is essential for four billion people and is an important goal of the millennium development goals.

“Food security is non-negotiable,” said Sharma, maintaining that India cannot accept the current interim mechanism because it fails to provide legal certainty. Public stockholding of food grains to ensure food security must be respected, he said.

In the run-up to the Dec. 3-6 Bali meeting, India along with a group of countries including Bolivia, Cuba, Kenya, South Africa, Venezuela and Zimbabwe pressed hard for improved rules to ensure that their public stockholding programmes for food security are not undermined by flawed trade rules.

The rules in the WTO agreement on agriculture were largely crafted by the European Union and the United States during the 1986-1994 Uruguay Round of negotiations. While the rules insulate mega subsidisers from clear discipline, they are somewhat indifferent to the concerns of countries with large populations. “Dated WTO rules need to be corrected,” Sharma said

More importantly, “any trade agreement must be in harmony with our shared commitment to eliminate hunger and ensure the right to food, which we accepted as part of the MDG agenda,” the Indian minister said.

At issue is whether developing countries like India and Kenya, which have massive public stockholding programmes, particularly procuring food grains from small and poor farmers at minimum support prices, should face legal challenges due to rules that are inconsistent with current global economic realities.

Over the last 15 years, prices of essential food items have gone up by over 250 percent.

India, along with the members of the G33 coalition of 46 developing countries led by Indonesia, made a strong case for changing some parameters in the current WTO agreement on agriculture.

The G33 called for updating the external reference price in the WTO agreement to reflect current global prices. The coalition also demanded that excessive inflation be taken into consideration when assessing the commitments.

The industrialised countries, led by the U.S. and EU, vehemently opposed the G33 demand last year, saying they would never allow any change in the rules. But after sustained sabre rattling and intimidating threats, the developed countries backed down from their initial position, promising a more flexible response.

They offered what is called a “Peace Clause” as part of the Bali package, which would provide temporary respite – for no more than four years – from any trade disputes. But although they agreed to continue the discussion, they did not commit to finding a permanent solution.

In sharp contrast to their opposition to food security proposals from the developing countries led by India and Kenya, the industrialised countries pressed for a brand-new agreement on trade facilitation, which involves comprehensive changes in the customs and import procedures. The new TF agreement calls for a number of changes in the previous WTO rules.

If concluded at Bali, the trade facilitation agreement would save around 441 billion dollars for developing countries, said the EU trade commissioner Karel de Gucht. In fact, the International Chamber of Commerce claimed that a WTO trade facilitation agreement would provide gains to the tune of one trillion dollars for the developing and least developed countries.

WTO director general Roberto Azevêdo has also made similar claims over the last three days to drum up support for the Bali package.

The trade facilitation agreement, said de Gucht, is “essentially a way to help many countries cut red tape at their borders, to become more efficient and effective traders.”

Although the industrialised countries have constantly repeated the mantra that trade facilitation would deliver enormous gains, they have so far offered no conclusive evidence to that end.

“Unfortunately, these figures depend on too many unjustifiable assumptions to be relied on,” wrote Jeronim Capaldo, an academic at the Global Development and Environment Institute at Tufts University near Boston in the U.S.

Inaccurate estimates and unclear gains have become the order of the day. “It is hard to see how uncertain gains and unequal distribution of costs [underlying trade facilitation estimates] can justify diverting resources to trade facilitation from badly needed policies such as the strengthening of social safety nets,” Capaldo argued.

The Bali meeting has brought the simmering conflict into the open. Participants described it as a clash of these two narratives – a food security-plus approach as proposed by India and other developing countries versus a TF-plus approach pushed by industrialised nations and some developing countries.

South Africa’s trade minister Rob Davies cautioned against the imbalances in the Bali package, particularly the tilt towards trade facilitation.

Kenya’s foreign minister Mohamed, meanwhile, said “I agree with India, and we all want a clear solution…I’m hopeful that language will be found to move forward on this issue… I don’t think it is in anybody’s interest to allow this ministerial to send the wrong signal that we cannot come together and that we cannot find language to satisfy millions of poor people. It is important we achieve a concrete result on this at the Bali meeting.”

The fate of the Bali package now hangs in the balance. In the next 72 hours, the world will know whether a solution could be found for addressing the food security issue – or whether the Bali package will be torpedoed due to unbridgeable differences.