Sunday, December 8, 2013

India's surrender at the Bali Ministerial

Some thoughts on the decisions at the WTO Bali Ministerial, held between 3rd and 6th of December 2013.

1) Basically, India protected its public stockholding programme "permanently", by agreeing to "negotiate". It is important to note that we now have an "interim mechanism" that aims to "negotiate on an agreement for a permanent solution". Valuations of support will not be based on current prices (as India demanded), but at the old 1987-88 prices. It is clear that there was significant US pressure on India not to walk out of the deal, and India complied. India actually could have walked out, as implied by Anand Sharma's statement that "no agreement is better than a bad agreement". Instead, they have agreed on postponing the decision, thus allowing key (even if symbolic) victories for the developed world on trade facilitation (TF) and other agendas. TF, as people say, is a "no-brainer"; but it requires enormous investment by developing countries in undertaking reforms and upgrading technology. Developing countries are also worried that non-compliance could lead to huge penalties, which would further increase the bargaining power of the developed world.

Further, the public stock clause applies only for "traditional staple crops" and currently existing subsidies; no future policy of food security support will be possible for India, or any other country.

2) The deal is being sold by the mainstream media and the West as a "trade facilitation deal", and the biggest success in free trade after 1995. The US Chamber of Commerce says, "The WTO has re-established its credibility as an indispensable forum for trade negotiations. Nor is this a paper victory: Streamlining the passage of goods across borders by cutting red tape and bureaucracy could boost the world economy."

3) India cannot exceed the de minimis Aggregate Measure of Support (AMS) in lieu of any other programme other than public stockholding. This is important, because fertiliser subsidy and other forms of input subsidy are still not allowed to exceed de minimis levels.

4) There is still no conclusive breakthrough on reduction of developed country subsidies in Bali. The LDC package (the second crucial element, apart from TF) does not have any binding commitments, but only promised endeavours. The LDC package has no improvement from the 2011 Geneva text.

Of course, we know that subsidies in both developed and developing countries have been helpful. But going by the demands of developing countries in Doha in this regard, there is no forward movement that India (or developing countries) can claim.

It is interesting that this is being spoken of as a forward movement from Doha, while the most important element of the Hongkong declaration was the elimination of export subsidies by the West by 2013. The Bali deal just says: "export competition remains a priority issue for the post-Bali work programme." There is also no movement on cotton subsidies in the West, which was an important demand of the African block.

5) In sum, India has contributed to a process of reaffirming faith in an almost-dead-and-irrelevant organisation called WTO (which in any case was being bypassed with bilateral and regional trade deals), without any substantial gain. It has not been able to permanently protect its public stock programme; it has not been able to correct the archaic valuation structure; it has not been able to question the idea of de minimis itself in any form (which was always the Left's argument) by agreeing, even if in the interim, to report violations of AMS levels regularly; it has shied away from building developing-country-solidarity in questioning the use of trade as a hegemonic instrument by the West (Thailand, Pakistan and Uruguay were actually against India in Bali with respect to public stocks); and it has lost a major chance to force a fundamental relook at the Marrakesh agreement.

(Many of these points are products of constant engagement with Dr Vikas Rawal, who has been observing the Bali Ministerial with great interest)