Dr Ashwani Mahajan
Ninth Ministerial Conference of WTOwas held in Bali, Indonesia, wherein an agreement was reached, which is being termed as a big victory by the government. Official version says that by virtue of this agreement, international trade related hurdles with regard to food security programme have been removed, as developed countries have agreed, not to raise disputes about support for public stock holding of food grains for food security exceeding the threshold limit of 10 percent of the total value of agricultural produce. The agreement reached after extending the conference by one more day, states that, “In the interim, until a permanent solution is found, provided that the conditions set out below (italics mine) are met, Members shall refrain from challenging through the WTO Dispute Settlement Mechanism, compliance of a developing Member with its obligations under Articles 6.3 and 7.2(b) of the Agreement of Agriculture (AoA) in relation to support provided for traditional staple food corps in pursuance of public stockholding programmes for food security purposes existing as of the date of this Decision (italics mine).”
It is notable that developed countries were trying to pressurize India to make further gains in WTO negotiations by saying that, India is giving more than threshold limit by way of support for public food grain stock holding for food security, against which they can raise disputes. It was imperative for the government, not to buy that argument, as the whole food security programme under much celebrated Food Security Act would have been in doldrums. Even before the Bali Conference developed countries were ready to offer a peace clause of four years, under which they would not raise disputes even if the support for public stock holding for the purpose of food security exceeds threshold limit of 10 percent of the total value of agriculture produce.
From the very beginning of this conference Indian delegation led by commerce minister Anand Sharma was ‘firm’ on the demand that, this peace clause is not acceptable to India. On December 5th 2013, in a press conference held at convention premises in fully packed hall with more than 500 media people, Anand Sharma said that, food security is non-negotiable for India. Elaborating the present in equitable and unjust system and rules of WTO, he said that the according to the formula for calculating support for Public Stock Holding for food security is unreasonably loaded against the developing countries, as the base year for pricing of food grains has been pegged at 1986-1988 prices (25 years old prices). After 1988 prices of food gains have gone manifold and therefore they cannot be accepted and there is a need to change the WTO rules.
However, by the evening December 5th after his meeting with US trade representative with the mediation of Indonesian trade minister and probably the phone call by Indonesian president to prime minister Manmohan Singh (as per newspapers’ reporting), scenario changed and Indian delegation softening its stand caved in leaving all its arguments with regard to unjust trade rules and gave consent to the final draft of agreement, which extended peace clause till permanent solution is reached in exchange with extending trade (read import facilitation), subject to fulfilling the conditions, set forth in the final draft, namely transparency, no new food security programme, monitoring and scrutiny of India’s food security programme; and by the morning of December 6th 2013, the draft was put on the website of WTO.
Foreign Eye on Indian Food Security
Final draft for agreement as notified by WTO has a clear transparency clause, which unambiguously states that it must notify to the Committee on Agriculture that it is exceeding or is at risk of exceeding either or both of its Aggregate Measurement of Support (AMS) limits (the Member’s Bound Total AMS or the de minimus level) as result of its programmes. Draft also mandates that Committee on Agriculture shall ‘monitor’ the information submitted under this decision. This implicitly implies that the country will have to admit year after year that it is exceeding the threshold limit of support on public stockholding for food security; and this information is subject to scrutiny by the member countries. Member countries, through a process of consultation, will also have the right to ‘scrutinize’ the food programmes of India, or for that matter other member countries and in case of any breach, the same could be disputed. All these provisions of the agreement clearly indicate at foreign eye on internal policy matters of India and also erosion of sovereignty of the country.
No New Food Programme any More
As per the draft, this peace clause will be applicable only to the existing food security programmes as of the date of this decision. Further, this agreement covers only Agreement on Agriculture (AoA), and not ASCM, without which the programme may be accused of impacting the export market, even if involuntarily, and would be subject to dispute.
End of Doha Development Round?
For the last five ministerial meetings, though no headway could be made in DDR, but hopes were alive that the issue of unequal treatment for developing countries and LDCs, leading to losses in international trade, would be addressed to. It is notable that developed countries give mammoth subsidies and there is a long standing demand of developing countries to reduce these subsidies. However, in the present agreement by agreeing to peace clause, however a better phrased than the earlier offer by developed countries, the momentum and pressure built in the last five ministerial conferences, has been suddenly released.
Not Trade Facilitation, but Import Facilitation
Final draft agreed in Bali, mandates developing countries to ensure various measures of trade facilitation, which includes efforts at simplifying border procedures (e.g. the modalities at the port), so that exports from developed countries could enter developing countries conveniently, without hassles. It is notable that trade deficit is exceeding 10 percent of GDP, and resulting payment crisis is weakening rupee day by day. By providing trade facilitation, imports from rest of the world may flood India, further worsening already difficult external payment position.
Further, several of the provisions under negotiations could hold significant administrative and institutional burdens on LDCs and other developing countries. Meeting the obligations as proposed, is likely to involve significant cost for developing countries. Apart from building, huge infrastructure (both soft and hard) including airports, sea ports, dedicated corridors, roads etc., it would also involve automation of customs system etc. It is unfortunate that no cost assessment has been made by government of India about implementing the provisions of trade facilitation. However, this is a fact that meeting this cost would mean a huge diversion of resources from public services such as health care, food security and education to customs administration. Therefore the claimed ‘victory’ of Indian delegation is actually a ‘defeat’. This can at best be said to be the victory of present regime, in overcoming possible international trade dispute in implementing food security programme, which is being seen as an election gimmick to garner votes. However in reality, this agreement has actually eroded sovereignty of the nation, on the one hand and put a ceiling on the freedom of future regimes to announce any more food security programmes. This agreement would in fact encourage food grain imports, sealing the fate of Indian farmers and worsening the payment crisis.
(The author is Associate Professor, Dept of Economics, P.G.D.A.V. College (University of Delhi)
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