Buenos Aires stalemate

As feared, the ministerial-level meeting of the World Trade Organization (WTO) has ended in a stalemate. Hopes that new deals on agriculture or e-commerce will emerge have thus been dashed. The WTO looked particularly helpless in Buenos Aires as it could not even agree to reform the subsidy regime for illegal overfishing that is depleting the world’s oceans — something on which, in principle, there is broad agreement.

One of the most vexed questions of dispute is, of course, the matter of food stockpiles in developing countries. This is of particular interest to India, which has, through its poorly conceived public distribution system, created a vast stockpile of foodgrain. Actions to add to or trade parts of this stockpile have big effects on world prices and thus can severely distort the market. Of course, the public procurement system is politically extremely sensitive in India, although it may make excellent sense to work towards reforming it, and to replace it perhaps with a form of income support for subsistence farmers so that they can gradually be weaned away from a dependence on wheat and rice that is straining the environment and distorting markets. Yet its political sensitivity means that India has gone to successive WTO meetings with, essentially, a one-point agenda: To protect its procurement system. Developed countries such as the US, meanwhile, are unwilling to cede India the right to create a food stockpile through domestic procurement in perpetuity. They argue that they are willing to make allowances for food security and thus accept the need for a stockpile — but not the need for exclusively local procurement to build that stockpile.

Other disputes also stand in the way of consensus, such as whether the People’s Republic of China should be certified as a market economy. The US complained that China was trying to pass off some state-owned firms as private companies, and with Europe and Japan, sought to address the question of overcapacity in China that was constraining world growth. Meanwhile, divisions also opened up among the developed world, China, and India on whether a deal was needed on e-commerce. Alibaba’s Jack Ma spoke in favour of a permanent moratorium on Customs duties on e-commerce; India was against it, or at least wanted issues related to more traditional development to be addressed first.

The Buenos Aires ministerial meeting underlined the essential problem with the engagement between developed countries, including, in this case, China, and developing countries like India in such fora. Developed countries have far greater capacity and so can come better prepared; thus on their priorities they can ensure specific commitments, while on the priorities of developing countries vague commitments tend to suffice. This is not just a product of unequal power, but of unequal negotiating ability — as can be seen from the fact that it is a pattern also visible in climate change negotiations and even in many bilateral deals. It is vitally important for India, which sees itself as a leader of the developing world in such fora, to seek to build its negotiating capacity. It must go beyond the existing bureaucracy if needed.

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