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In a repeat of events a year ago, India is unlikely to ratify the World Trade Organization (WTO)'s trade facilitation agreement (TFA), even as it has decided to seek a permanent solution on the food stockholding issue at the coming 10th ministerial meeting in Nairobi, Kenya, in December.
The government is believed to be again taking a tough stance, as it did last year when it decided to veto the protocol of amendment of the TFA that made it a legal agreement under WTO. It is learnt the government has decided to not ratify the pact, as there has been no progress in negotiations on a permanent solution on food security for stockholding purposes.
Besides, India was also miffed with the fact that there had been no positive discussion on other issues of the Doha round, the most important being a 'substantial reduction' in the overall trade distorting subsidies (OTDS) of developed countries in their farm sector, officials told Business Standard.
At a meeting of the WTO's General Council on Tuesday, director general Roberto Azevêdo said it remains very unlikely that a clearly defined work programme on the remaining Doha issues could be agreed by the mandated deadline of July 31.
However, he said that this did not in any way mean that members could not reach a successful outcome at the 10th ministerial conference in Nairobi this December.
Legally, India cannot be taken to the WTO dispute settlement body for not ratifying the TFA. However, rich WTO members such as the US, the European Union, Canada and Australia want India to implement the TFA, which will boost seamless movement of goods, due to the sheer size of its market. Once ratified, the TFA will come into effect. However, according to WTO norms, for the TFA to come into force, two-thirds of the entire WTO membership must ratify the agreement by submitting its 'instrument of acceptance' to the multilateral trade body.
So far nine countries have ratified the deal. China and EU is expected to do it soon.
The TFA has to be ratified by the 10th ministerial.
The TFA seeks to relax customs rules, allowing seamless flow of goods across international borders. Once implemented, it is expected to infuse $1 trillion into the global economy and add 21 million jobs, according to Organisation for Economic Cooperation and Development estimates.
On a permanent solution for the food stockpiling programme, India believes developed countries aren't working cohesively towards changing the reference price from 1986-88 for calculating farm subsidies. The deadline to find a permanent solution, which entails offering those subsidies to farmers who are otherwise prohibited under global trading rules, is December 31. If this deadline isn't met, countries that run food stockpiling programmes can continue using the 'peace clause', which allows them to keep giving subsidies to poor and marginal farmers. India follows the mechanism of minimum support price (MSP).
Meanwhile, the US and a couple of other developed countries have raised questions with the ministry of commerce and industry on the methodology followed and the quantum of MSP given to farmers.
Additionally, India wants a clear work programme on all the pending issues of the Doha round, which started in 2001, such as non-agriculture market access and a reduction in OTDS at the ministerial meeting, the WTO's highest decision-making body, scheduled for December 15-18.
In a written reply to the Rajya Sabha last week, Commerce and Industry Minister Nirmala Sitharaman said, "India is working with WTO members to ensure a permanent solution at the earliest."
SEEKING A WAY OUT
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The deadline to ratify the TFA is December 2015, after which it will come into force
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India wants a permanent solution to the issue of food security for public stockholding
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It will demand a clear road map on the remaining Doha issues at the Nairobi ministerial
- It is expected to come down heavily on developed countries to take significant cuts in their farm subsidies
