India to block WTO trade facilitation pact

Decision in today's Cabinet meet

New Delhi is most likely to block the World Trade Organization’s (WTO) eagerly-awaited trade facilitation agreement (TFA) in a bid to safeguard its interest on food stockpiling and food grain subsidies. The Cabinet, which was supposed  to meet on Wednesday to take a call on this, deferred the meeting by a day.

According to sources, the Cabinet meeting, which will be chaired by Prime Minister Narendra Modi, will now take place on Thursday morning and it is likely to spell out India’s stance on the contentious issue, something which will be closely watched internationally.

Apparently, a decision on the issue was readied on Tuesday night itself, when Modi met Finance Minister Arun Jaitley and Commerce Minister Nirmala Sitharaman.

FIGHT OVER PACT

• India is worried trade facilitation protocol will come in the way of its programme to feed the poor
• Govt officials say the subsidies are “a fraction of what developed countries give to their rich farmers”
• July 31 is deadline to for nations to sign the protocol into law
• Developing nations angry at rich countries for failing to address their concerns
• Those who back the protocol believe the deal could add $1 trillion to global gross domestic product and 21 million jobs

A senior official told Business Standard that the government has decided that it will “not take any chance” based on what was decided by the previous United Progressive Alliance (UPA) government, which had agreed to the Bali Package during the WTO’s ninth ministerial meeting.

In Bali, it was decided the TFA, which seeks to streamline customs procedures for smooth movement of goods across the international borders, will be signed into a legal document by July 31, which will then eventually come into force from July 2015. It was also agreed in Bali that negotiations on public stockholding and food subsidies will take place so that a permanent solution on granting subsidies can be arrived at by 2017.

However, the Bharatiya Janata Party government, which came in power in May, is not ready to agree to such a deal and is most likely to veto the TFA. The signing of the TFA by all WTO-member countries is essential. If TFA gets signed, it would be the first-ever agreement where consensus was achieved ever since the talks to have global trade deal started in Doha in 2001.

Sitharaman also postponed a media briefing, which was supposed to take place on this issue on Wednesday.

It is learnt Indian negotiators at the WTO headquarters in Geneva are awaiting a proper signal from New Delhi.

“The Indian negotiators seem baffled, as they kept waiting for months after months on what the new government’s stand on this issue will be. If they wanted to stop the TFA, why did they not put forward an alternative on the table for members to negotiate?” asked a senior trade official involved in the talks in Geneva.

While Thursday’s Cabinet meeting will take a final call on the issue, even though it is still unclear whether the decision will be make public, there is going to be a General Council meeting that will take place at the WTO where a consensus is likely to emerge.