WTO Trade Facilitation pact, food security signed

The decision preceded long hours of tense negotiations and last minute hiccups from Argentina and Pakistan

After almost 11 months of parleys, the World Trade Organization (WTO) on Thursday signed the trade facilitation agreement (TFA) and agreed to India’s demand for a perpetual ‘peace clause’ till a final solution to the issue of food stockholding is found. The decisions were taken at a ‘special’ meeting of the WTO General Council (GC), the highest decision-making body after ministerial conferences.

Following tense negotiations and last-minute hiccups due to oppositions from Argentina and Pakistan, the GC adopted three main decisions — signing of the TFA protocol, extension of the ‘peace clause’ for an indefinite period and setting a deadline for the remaining Bali package commitments for poorer countries. “With Thursday’s decision, our chances of getting a permanent solution to the food stockholding issue gets a massive boost. Now we do not have to beg for it. We are now in a position to negotiate an optimum solution,” an official involved in the talks told Business Standard.

WTO had not issued an official statement till the time of going to press.

The breakthrough came after India and the US earlier this month reached an understating where the Americans assured support to India’s demand for a permanent ‘peace clause’ and, in turn, India agreed to sign the TFA, which it had vetoed in July.

The TFA, expected to infuse $1 trillion into the global economy and create 21 million jobs, will now be open for ratification by all 160 member countries. After that, it will be implemented by July 2015.

“WTO has taken a critical step forward by breaking the impasse that had prevailed since July. I am pleased that the US was able to work with India and other WTO members to find an approach that preserved the letter and spirit of the package of decisions reached at last year’s Bali Ministerial Conference. With this win under WTO’s belt, we can again focus our efforts on revitalising the organisation’s core negotiating function,” said US Trade Representative Michael Froman.

The Bharatiya Janata Party, which came to power at the Centre in May after a landslide victory, had vetoed adoption of the process that would have turned the TFA into a legally binding deal by July 31, the previously set deadline.

Since then, the government had been insisting on having

a parallel agreement on public food stocks for its poor and marginal farmers.

STEPS TO THE PACT

Dec 7,’13: WTO 9th ministerial concludes in Bali. Members agree to sign TFA. India claims victory for achieving the ‘peace clause’ for a period of four years that will give it the freedom to provide WTO-prohibited subsidies to its poor and marginal farmers
February ‘14: July 31 fixed as deadline to sign TFA pact; to fully implement it by July 2015
July 31: WTO General Council suspended; India refuses to sign the TFA, demands a parallel agreement on food stockholding
Sep 29: Preparatory committee on trade facilitation meets; India stays firm on stand. US denies further meetings on TFA, demanding a pact on food security along with TFA will entail collapse of entire Bali Package
Sep 30: PM Modi holds first meeting with US President Obama; both agree on achieving "next steps" in WTO talks
Oct 16: Trade Negotiations Committee meets; talks inconclusive
Nov 13: India claims to garner US’ support on its concern for food stockpiling
Nov 27: WTO ‘special’ General Council agrees to TFA implementation and food security ‘peace clause’

A permanent ‘peace clause’ insulates India and other developing countries with public stockholding programmes from challenges by other WTO members, even for violation of global rules on farm subsidies.

The so-called ‘peace clause’ also grants India the freedom to offer subsidies to its farmers without following any limit. The cap, according to WTO rules, is 10 per cent of the total production of the crops that are covered under the food stockholding programme.

At present, India offer subsidies in the form of ‘minimum support price’ for rice, wheat and cereals. However, the ‘peace clause’ does not come for free. India, along with other developing countries, have to adhere to some strict conditions to avail of the interim relief. The most important rider pertains to future food stockholding programmes, which would not be covered under this provision. In other words, any new food stockholding programme will have to follow WTO’s 10 per cent threshold.

Another condition is that countries following food stockholding programmes will have to ensure they do not distort trade and adversely affect similar schemes of other developing countries. Otherwise, the affected country will have to the option of appealing to the WTO dispute-settlement body.