India not to push services agenda at WTO meet

A worker sitting on a cart carrying rice sacks in New Delhi. File photo: Reuters
India will not be pushing its proposal of a global trade facilitation agreement on services trade at the upcoming World Trade Organization (WTO) meet in December.

Instead, the country will throw its weight behind the demand to find a permanent solution to the issue of public stockholding of food for food security purposes and domestic subsidy to the agriculture sector, India’s ambassador to the WTO, JS Deepak has said. 

The WTO’s biennial ministerial conference — to be held in Buenos Aires, Argentina — is the biggest multilateral consultation among nations regarding global trade and investment norms. It is expected to set the discussion and norms for sectoral issues, at least for the next two years. Over the past nearly one year, India has been pushing for a trade facilitation agreement (TFA) on services, based on the similar TFA on merchandise goods that became functional in February, earlier this year. India’s proposal focuses on expediting the global trade in services, by allowing for easier movement of skilled workers between countries, among others.

But the more important issues for India and the developing world now lie within the realm of agriculture whereby richer nations oppose India’s rights to give farm subsidies and other issues, Deepak told India Inc at a consultation session organised by the Confederation of Indian Industry recently. 

However, he also added that the decision was tempered by the fact that India was yet to suitably create alliances with other nations on the issue. While the developed world has opposed it as usual, the services importing nations of the African bloc have also resisted it, he said.

But India’s position on agricultural has been thrown under question after Commerce and Industry Minister Suresh Prabhu has said that India’s insistence on a permanent solution to the matter is “a mistake” since India already has an indefinite interim solution in place.

Other issues galore at WTO

Last month, the WTO had broken conventional practices to call a 2-day mini-ministerial meet in Morocco for hammering out the exact agenda for the subsequent biennial summit in December. However, stark differences among member nations remain less than a month before the WTO meet starts, Commerce Secretary Rita Teaotia had said at the same event.

India will also have to battle the prevailing air of trade protectionism globally, being fueled by the Donald Trump led administration in the United States. “The very same nations which has benefited the most from global liberalization are now espousing protectionism,” Teaotia said.

Also, richer nations led by the US and the European Union have supported the introduction of a proposed set of global rules for e-commerce. WTO procedures mandate that any new resolution garner the unanimous support of member-countries before being adopted. Even so, some nations, including Australia, Switzerland and Norway, have made fresh arguments on its behalf.

On the other hand, another group of nations, led by China is also pushing for a similar trade facilitation agreement (TFA) on investment. The government feels allowing such a discussion at WTO would be akin to handing over policy space to decide on things such as the foreign direct investment norms and arbitration clauses.

Agricultural headache

But senior government officials also admitted that getting the developed economies to agree to India's agricultural demands will prove to an uphill task. The development-based issues of the Doha Development Agenda (DDA) have continued to be sidetracked by richer nations who have built their economies on agricultural exports.

Following India’s agreement with the US on the issue in 2013, the Bali Ministerial Conference came up with the “peace clause” that permitted uninterrupted implementation of India’s food security programme till a permanent 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, Abhijit Das, head of the Centre for WTO studies said.

But for a permanent solution, India has proposed either amending the formula to calculate the food subsidy cap of 10 per cent, which is based on the reference price of 1986-88 or allowing such schemes outside the purview of subsidy caps. India also plans to formalize the Special Safeguards Mechanism, a long-standing demand of developing nations, allows countries to temporarily raise tariffs to deal with surging imports 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 poorer economies have adapted to changes in the global economy and switched camps to the developed side of the negotiations.