Australian interlocutors say G-20 nations will have to reflect on why WTO's TFA talks failed

Representing interlocutors of Australia, which currently holds the presidency of the G-20, and will host this year's G-20 Summit in November in Brisbane, said Tuesday that member nations would now be passing through a difficult period of reflection as to why the World Trade Organization (WTO) had failed to ratify its first landmark deal since its inception in 1995.

The Australian interlocutors were referring to the expiry of the July 31 deadline for the signing the Trade Facilitation Agreement (TFA).

India, backed by Cuba, Venezuela and Bolivia, declined to sign the agreement in Geneva, Switzerland, that would have secured the deal before the WTO-imposed deadline of July 31.

The deal would have been the first such multi-party agreement involving all 160 members of the WTO.

At an informal meeting of the Trade Negotiations Committee of the WTO in Geneva, Director-General Roberto Azevedo said the July 31 deadline was more than "just another minor procedural landmark," warning that the failure to reach a deal would have "significant consequences."

The Trade Facilitation Agreement, or TFA, part of a broader reform to boost world trade, was formulated in December 2013 during the ninth ministerial conference of the WTO in Bali, Indonesia.

The TFA, through a worldwide reform of duties and tariffs, and a reduction in red tape at international borders, aims to ease trade relations between countries.

According to some estimates, the TFA could add a trillion dollars in new trade globally and create 20 million new jobs worldwide.

The WTO-imposed deadline to sign the protocol by the 160 member countries was July 31, following which it was meant to come into effect from July 2015.

India opposed the TFA on grounds that its Food Security Act, which was passed by its parliament last year, involves providing subsidized food grains to a large chunk of the country's population, most of which lives below the poverty line.

To achieve this, the Indian Government buys rice and wheat from farmers in enormous quantities at above-market prices.

India's objection was to the TFA capping yearly subsidies in developing countries at 10 percent of the value of agricultural production, putting it at risk of violating WTO rules.

India has been and continues to demand a parallel pact, which would allow developing countries to continue subsidizing and stockpiling food.

India maintains that other WTO members had agreed to not file complaints against its food-subsidy program until a permanent solution is worked out by December 2017.

The Narendra Modi Government wants a more immediate solution, preferably by the end of 2014, in exchange for signing the TFA.

Interacting with select media at the Australian High Commission on Tuesday afternoon, Australia's G-20 Sherpa and Deputy Secretary in the Department of the Prime Minister and the Cabinet Dr. Heather Smith and Australian B-20 Sherpa Robert Milliner said they were appreciative of India's food security concerns, and were confident that New Delhi will be thinking about the next steps in reaching a workable TFA.

However, they emphasized that the G-20 cannot be a negotiating forum for trade facilitation, but can certainly provide political momentum so that there is a general agreement on trade as a key for global growth strategies.

Referring to the recommendations made by the B-20 last month, Milliner said the G-20 could request the WTO to compile a summary of relevant policies to enable each G-20 member to commit to a timeframe to cease and/or reverse trade restrictive policies identified by the WTO, to be held accountable by the G-20 collective.

Specifically, he said the B-20 will consider each G-20 country successful if it reduces the number of barriers each year.

He said that the B-20 has recommended enhancing monitoring and compliance mechanisms.

The challenge, he said, is that of addressing trade barriers as a global issue, wherein G-20 members should commit to working with non-G-20 countries on alternatives to trade-restrictive policies.

He said that according to an estimate prepared by the Peterson Institute of International Economics (PIIE), improvements in trade facilitation could increase global exports by over a trillion dollars, with global GDP uplift estimated at 960 billion dollars. The corresponding benefit for G-20 countries, he said is approximately 820 billion dollars in terms of GDP and or 16 million jobs.

Both said the need of the hour was to promote growth initiatives, an effective competition policy, promotion of a multi-year approach to investment in infrastructure, trade facilitation, more markets, creation of jobs, have a financial regulatory agenda to focus on deliverables, ensure a global taxation system that was 21st century friendly, promote financial inclusion, a cause endorsed by India and promotion of energy security among others. (ANI)

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