India closes door, keeps window open

PM Narendra Modi said developed countries should “understand” the challenges of poverty in developing nations.

By: ENS Economic Bureau | New Delhi | Updated: August 2, 2014 9:35:26 am
US Secretary of State John Kerry with PM Narendra Modi and Swaraj in Delhi on Friday. (Source: PTI) US Secretary of State John Kerry with PM Narendra Modi and External Affairs Minister Sushma Swaraj in Delhi on Friday. (Source: PTI)

A day after its unyielding stand on food security put the multilateral process at the World Trade Organisation (WTO) to liberalise global trade in jeopardy, India on Friday restated its commitment to resuming efforts to build a consensus on outstanding issues by September.

“We are ready to engage on day one (when WTO reconvenes in September) with a clear understanding that our position with regard to food security and our commitment to the Trade Facilitation Agreement (TFA) is 100 per cent firm,” said a senior government official.

According to the proposal submitted by India at the WTO on Thursday, which was “within the contours of the original one”, New Delhi has suggested that the interim relief on breach of the 10 per cent food subsidy cap “should continue till perpetuity or even after the eleventh ministerial (scheduled in 2017), till a permament solution is found, while there should be enhanced process to find a permanent solution by December 31,” another official told The Indian Express.

The deadline to sign the WTO pact to ease worldwide Customs rules lapsed at midnight in Geneva on Thursday, after India demanded that the group also finalise an agreement giving it more leeway to subsidise and stockpile foodgrain than permitted under WTO rules.

Late on Friday evening, against the backdrop of the US blaming India for the failure of the WTO talks, Prime Minister Narendra Modi said developed countries should “understand” the challenges of poverty in developing nations and their governments’ responsibilities to address them. Modi, according to a PMO statement, conveyed the message to US Secretary of State John Kerry and Secretary of Commerce Penny Pritzker when they called on him here.

Informing the WTO members of the developments just two hours before the deadline got over late on Thursday night, WTO director general Roberto Azevedo said, “We have not been able to find a solution that would allow us to bridge that gap. We tried everything we could. But it has not proved possible. The fact that 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.”

However, going forward, Azevedo indicated that he would be “travelling and talking” to members during the month to get their views on the present situation and the way forward. WTO diplomats will go on summer break in August and will meet again in September.

“When everyone is back in Geneva, I will be asking the chairs of the negotiating groups and the regular bodies to consult with members on what can be done in these changed circumstances. As I have indicated, I will be doing the same under my own authority — I will be talking to members and to the chairs and will report back to you all in due course,” he said.

The interim relief, called the peace clause, effectively ensures that until a permanent solution is found, developing countries, including India, could continue with their public food stockholding programmes without being challenged through the WTO dispute settlement mechanism in case they breach the 10 per cent limit prescribed by the WTO.

The official said the peace clause, which expires after four years, should continue beyond the eleventh ministerial scheduled in 2017, because “our problem is that we don’t need a peace clause right now as we are not defaulting right now. We need it after 2-3 years as we are very close to the 10 per cent subsidy cap, especially in two crops — wheat and rice.”

Several WTO member states voiced their disappointment after India’s demands led to the collapse of the first major global trade reform pact in two decades. WTO ministers had already agreed to the global reform of Customs procedures, known as the Trade Facilitation Agreement, in Bali last December, but were constrained by India’s objections.

Even as a Reuters report from Geneva suggested that some countries, including the US, the European Union, Australia, Japan and Norway, had already discussed a plan to exclude India from the facilitation agreement and push ahead regardless, other such as New Zealand countered this view.

New Zealand Minister of Overseas Trade, Tim Groser, told Reuters there has been “too much drama” surrounding the negotiations and added that any talk of excluding India was “naive” and counter-productive. “India is the second biggest country by population, a vital part of the world economy and will become even more important. The idea of excluding India is ridiculous. I don’t want to be too critical of the Indians. We have to try and pull this together and, at the end of the day, putting India into a box would not be productive,” he added.

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