Govt to finalize stand on WTO trade facilitation agreement on Wednesday - Livemint

India stockpiles foodgrains for the public distribution system to meet food security needs, but that carries the risk of breaching WTO rules. Photo: Pradeep Gaur/Mint

New Delhi: India will finalize its stand on a multilateral trade facilitation agreement (TFA) at a cabinet meeting on Wednesday, one day before the general council of the World Trade Organization (WTO) takes up the agreement aimed at streamlining cross-border trade.

India is expected to push for simultaneous progress on all issues on which agreement was reached at Bali, Indonesia, in December 2013 and not on trade facilitation alone.

India told WTO members in the first week of July that it would not ratify the TFA, reached as part of a package at the Bali ministerial conference, on grounds that talks on finding a permanent solution to the issue of food security and public stockholding are not progressing as expected.

Since decisions are reached on the basis of consensus at the WTO, India on its own can thwart implementation of the TFA, even at the cost of being labelled a deal breaker.

“The position that we have taken as a sovereign nation at Bali has to be honoured. However, we have taken a stand to say what is happening is wrong,” a senior commerce ministry official said, requesting anonymity.

The cabinet would decide on the stand India would now take on the issue at the WTO, this official said.

India stockpiles foodgrains for the public distribution system to meet food security needs, but that carries the risk of breaching the rules of the multilateral trade organization. The WTO holds that stockpiling subsidized food can distort trade beyond the permissible limits.

India believes the TFA, which aims to simplify customs procedures, facilitate the speedy release of goods from ports and cut transaction costs, benefits wealthy nations more than developing countries. It suspects that developed countries will have little interest in finding a permanent solution on food security, which is in India’s interest, once the developing countries sign off on the TFA.

India told a meeting of the Group of 20 (G20) countries on Saturday that it is committed to fulfilling every aspect of Bali agreement, the official cited above said. “But we are also saying it has to be a single undertaking. We are opposed to the stand-alone treatment of trade facilitation.”

Although the deadline for signing the TFA is 31 July, the official said India has to put out its proposal so that both sides will have time to move forward well before the deadline.

As reported by Mint on Monday, Australian trade and investment minister Andrew Robb , after the G20 trade ministers meeting on Saturday, did not take note of India’s opposition and in his chairman’s summary said the members agreed for the full implementation of all elements of the Bali outcome, including the TFA, “consistent with the agreed timelines”.

The commerce ministry official said India’s trade minister Nirmala Sitharaman objected to the chair’s summary at the G20 meeting, holding that it does not reflect India’s concerns on the lack of progress on food security and public stockholding issues. The official said that at the meeting, South Africa and Argentina supported India’s stand while China was sympathetic to the cause.

Now that India has taken a tough stand, it should derive a commitment and clarity on how negotiations on food security will progress, said T.S. Vishwanath , principal adviser at APJ-SLG Law Offices.

“The African countries have also raised the issue of no progress on issues of their interest such as duty-free and quota-free market access for least-developed countries. India has a fairly strong position,” Vishwanath said.

The Bali package was the first multilateral agreement reached by the WTO since its formation in 1995. India played hardball in Bali, with then trade minister Anand Sharma insisting that food security was non-negotiable.

Much of the discord was around a so-called peace clause on food security, proposing that developing countries cannot be challenged if they breach an agreed 10% government subsidy cap on the value of production of foodgrains.

Developed countries were proposing to limit the period of the peace clause to four years. This was finally changed to mean a “temporary solution till a permanent solution is found”.