Ten reasons for saying “no” to the North

India’s insistence that the issue of food security stocks be resolved alongside agreement on trade facilitation can bring this and other neglected development concerns back to the centrestage of WTO negotiations.

by Ravi Kanth Devarakonda and Phil Harris

GENEVA/ROME: India’s decisive stand not to adopt the Protocol of Amendment of the Trade Facilitation Agreement (TFA) unless credible rules were in place for the development issues of the South was met with “astonishment” and “dismay” by trade diplomats from the North, who described New Delhi’s position as “hostage-taking” and “suicidal”.

It obviously came as something of a shock for representatives of Northern interests that any party should have the brass neck to place the interests of its constituents on the negotiating table. After all, why should such banal issues as food security and poverty get in the way of a trade agenda heavily weighted in favour of the industrialized countries?

In fact, it was India’s firm stand for permanent guarantees for public stockholding programmes for food security that turned this trade agenda upside down at the WTO, putting paid to the adoption of the Protocol of Amendment for implementation of the contested TFA for the time being.

On 31 July, India and the United States failed at the WTO to reach agreement on construction of a legally binding decision on a “permanent peace clause” that would further strengthen what was decided for public distribution programmes for food security in developing countries at the ninth Ministerial Conference in Bali, Indonesia, last year.

The Bali decision on food security was one of the nine non-binding best-endeavour outcomes agreed by trade ministers on agriculture and development.

For industrialized and leading economic tigers in the developing world, the TFA – which would harmonize customs procedures in the developing world on a par with the industrialized countries – is a major mechanism for market access into the developing and poorest countries.

The failure to reach agreement came during separate closed-door meetings held by WTO Director-General Roberto Azevedo with India and the United States in an attempt to break the impasse between the world’s two largest democracies.

New Delhi was demanding nothing more than credible global trade rules to ensure that “development,” including the challenges of poverty, in the countries of the South take precedence over the cut-throat mercantile business interests of the transnational corporations in the North.

 

Unfinished business

Trade diplomats from several developing and poorest countries in Africa, South America and Asia say India’s “uncompromising” stance will force countries of the North to return to the negotiating table to address the neglected issues in the Bali package concerning agriculture and development.

These issues are at the heart of the unfinished business in the Doha Development Agenda (DDA) negotiations, the current round of trade negotiations aimed at further liberalizing trade.

“It is important to keep the battle alive and India has ensured that the big boys cannot simply walk away with the trade facilitation agreement without addressing the concerns on food security and other major issues,” one African official said.

The industrialized countries and some rising economic tigers in the developing world are unhappy that they cannot now take home the TFA without addressing the problem raised by India and other developmental issues in the Doha Development Agenda negotiations.

Many developing and poor countries in Africa and elsewhere were opposed to the TFA but they were “arm-twisted” and “muzzled” by the leading superpowers over the last three months. African countries, for example, were forced to change their stand after pressure from the United States, the European Union and other countries.

The TFA was sold on false promises that it would add anywhere up to $1 trillion to the world economy.

During the Bali meeting last year, The Economist of London, for example, gave two different estimates – $64 billion and $400 billion – as gains from the TFA, while the International Chamber of Commerce gave an astronomical figure of $1 trillion without any rational basis.

“Those predicted gains [from the TFA] evaporate when one looks at the assumptions behind them, such as the assumption that all countries in the world would gain the same amount of income from a given increase in exports,” said Timothy A. Wise and Jeronim Capaldo, two academics from the Global Environment and Development Institute at Tufts University in the US.

At one go, the TFA will provide market access for companies such as Apple, General Electric, Caterpillar, UPS, Pfizer, Samsung, Sony, Ericsson, eBay, Hyundai, Huawei and Lenovo to multiply their exports  to the poorest countries.

It would drive away scarce resources for addressing bread-and-butter issues in the poor countries and direct them towards creating costly trade-related infrastructure for the sake of exporters in the industrialized world.

Here are 10 reasons why trade diplomats from the developing and poorest countries say India’s stand will bolster their development agenda:

1.   India’s stand on food security brings agriculture, particularly the unfinished business in the DDA negotiations, back to centrestage.

2.   The Doha trade negotiations were to have been concluded by 2005 but remain stalled because a major industrialized country put too many spanners in the negotiating wheel.

3.   Major industrialized countries have been cherry-picking issues from the DDA which are of interest to them while giving short shrift to core “developmental” issues.

4.   Issues agreed in the Doha negotiations, such as the “July package” agreed on 1 August 2004, the Hong Kong Ministerial Declaration of December 2005 and the un-bracketed understandings of the December 2008 Fourth Revised Draft Modalities for Agriculture, have all been pushed to the backburner because one major country does not want to live up to them.

5.   The Fourth Revised Draft Modalities for Agriculture provided an explicit footnote to enable the developing countries to continue with their public stockholding programmes for food security. That footnote was the result of sustained negotiations and a compromise solution among key WTO members such as the United States, the European Union, India, Brazil, Australia and China, but the United States refused to accept the footnote because of opposition from its powerful farm lobbies.

6.   Trade-distorting practices in cotton which are harming producers in Benin, Burkina Faso, Mali and Chad are supposed to be addressed “ambitiously”, “expeditiously” and “specifically” by the distorting countries in the North. But cotton is now being swept under the carpet because a major industrialized country does not want to address the issue because of its farm programme.

7.   Trade facilitation was one of the Doha issues but not the main item of the agenda at all. It was actually dropped from the Doha agenda in Cancun, Mexico, in 2003 and was brought back in 2004 due to pressure from the United States and the European Union. The core issues of the Doha agenda were agriculture, services and developmental flexibilities.

8.   A major industrialized country which pocketed several gains during the negotiations refuses to engage in “give-and-take” negotiations based on the above mandates and has turned the Doha Round upside down.

9.   Industrialized countries along with some developing countries have formed a coalition of countries willing to pursue what are called “plurilateral” negotiations, only to undermine the DDA  negotiations which are multilateral and based  on  what is called a “single undertaking” (that is, nothing is agreed  until  everything  is  agreed). Currently, these countries are negotiating among themselves on services, expansion of information technology products and environmental goods even though these issues are being negotiated in the Doha Round.

10. Delay in the adoption of the trade facilitation protocol will pave the way for a healthy debate to reinvigorate the multilateral trading system which is being undermined by those who created it in 1948. The developing and poor countries want credible and balanced multilateral trading rules to replace what was agreed over 25 years ago in order to continue their “developmental” programmes with a human face.

Herein lies the crux of the issue – are the major powers of the North prepared to go along with a global trading system that puts the interests of the majority of the world’s people before their own interests? (IPS)

Third World Economics, Issue No. 575, 16-31 Aug 2014, pp6-7, 10