India to soft-pedal on services at WTO meet

India will demand for an agreed solution on the issue of public stockholding of grain for food security, besides domestic subsidies to the agri sector

The Government of India will not be pushing its proposal of a global trade facilitation agreement (TFA) on services at next month’s meet of the World Trade Organization (WTO).

Instead, the country will throw its weight behind a demand for an agreed solution on the issue of public stockholding of grain for food security, besides domestic subsidies to the agriculture sector, said J S Deepak, India’s ambassador at WTO. 

The global body’s biennial ministerial conference is due next month, at Buenos Aires, Argentina. It is expected to set the discussion and norms on sectoral issues for another two years, if not more. 

Over nearly a year, India has been pushing for a TFA on services, based on the similar one in merchandise goods that became functional this February. India wants easier movement of skilled workers between countries, among others.

However, the more important issues for India and the developing world are now considered to be in agriculture, with richer nations opposing India’s stand on farm subsidies and other issues, Deepak said on Friday at a consultation session organised by the Confederation of Indian Industry. 
 

However, he added, India was yet to suitably create alliances with other nations on the issue. The developed world has opposed the country’s  stand on this as usual but the services-importing nations of the African bloc have also resisted it, he said.

Last month, the WTO had broken conventional practice to call a two-day mini-ministerial meet in Morocco for agreeing on agenda details for the December conference. However, deep differences remain among member-nations, said Commerce Secretary Rita Teaotia at the same event.
 

India will also have to battle the prevailing air of trade protectionism, fuelled by the Donald Trump administration in the United States. “The very same nations which have benefitted the most from global liberalisation are now espousing protectionism,” Teaotia said.

Richer nations, led by the US and the European Union, have also supported the idea of a set of global rules for e-commerce. Australia, Switzerland and Norway have made  arguments on its behalf. Another group of nations, led by China, are pushing for a similar TFA on investment.
 

The government feels allowing such a discussion at the WTO would be akin to handing over policy space to decide on things such as our foreign direct investment norms and arbitration clauses.

Senior government officials add that getting the developed economies to agree to India’s agricultural demands will be an uphill task. The development-based issues of the Doha Development Agenda (DDA) have continued to be sidetracked by richer nations, which had built their economies on agri export.

Following India’s agreement with the US on the issue in 2013, the Bali ministerial conference came up with the ‘peace clause’ that permitted implementation of India’s food security programme till a solution was found. This allows India to procure and stock foodgrain for distribution to the poor without being penalised by WTO members even if it breaches the 10 per cent subsidy cap prescribed by the multilateral trade body.

In the search for a permanent solution, India has proposed either amending the formula to calculate the food subsidy cap of 10 per cent (based on the reference prices of 1986-88) or allowing such schemes outside the purview of subsidy caps. India also plans to formalise the Special Safeguards Mechanism, a long-standing demand of developing nations; these allow countries to temporarily raise tariffs to deal with surging import and subsequent price falls.

However, the DDA, adopted in 2001 at the fourth ministerial conference, has not seen much progress in the past 16 years, even as quite a few poorer economies have adapted to changes in the global economy and switched camps to the developed side of the negotiations.