WTO deal collapses, India plays hardball

Modi_SeriousThe efforts to reach a consensus on a Trade Facilitation Agreement failed at the World Trade Center as India stuck to its key demand that this agreement must be bundled with a permanent solution on food subsidies.

India has challenged the WTO’s existing rules which limit subsidies to 10 per cent of the total value of agricultural production based on 1986-1987 prices.

This would severely impact India’s food security programme, leaving its extreme poor hopeless. The violation of the rule entails heavy penalties from the WTO.

But not all is lost as negotiations are not dead yet. Member nations will meet in Geneva in September after a month-long recess. India’s government officials have already suggested that they are willing to engage with the global trade body, and have asked for an indefinite peace clause on food security till all parties can agree on a permanent solution.

After the agreement collapsed on July 31, WTO Director-General Roberto Azevado asked member to “to reflect long and hard in the ramifications of the setback.”

Indian officials, however, have expressed their reservations about such dramatics by Western countries and Mr Azevado after the collapse of the talks. They contended the failure to reach an agreement was not a cataclysmic event, and that talks will take place in a month where a sustainable solution, agreeable to all, can be reached.

US Secretary of State John Kerry, who met India’s Prime Minister Narendra Modi on August 1, has voiced disappointment at India stand at the WTO.

“The failure of implementing the trade Facilitation Agreement sends a confusing signal and undermines that very message that India is seeking to send,” said Mr Kerry, as he wrapped up his three-day visit to India.