US, India resolve impasse on TFA/food security issue

A deal has been struck between the US and India that looks set to break the stalemate in the WTO surrounding the issues of trade facilitation and public food stocks.

by Kanaga Raja

GENEVA: Both the United States and India officially announced on 13 November that they have reached an agreement aimed at breaking the current deadlock at the World Trade Organization over the issue of public stockholding for food security purposes and the implementation of the Trade Facilitation Agreement (TFA).

The announcement of the breakthrough came in separate press releases from the Office of the US Trade Representative (USTR) and the Ministry of Commerce and Industry of India.

In the statement issued by the Press Information Bureau, Indian Commerce and Industry Minister Nirmala Sitharaman said: “We are extremely happy that India and the US have successfully resolved their differences relating to the issue of public stockholding for food security purposes in the WTO in a manner that addresses our concerns.”

This will end the impasse at the WTO and also open the way for implementation of the Trade Facilitation Agreement, she added.

She expressed confidence that the membership will take the matter forward in the WTO in a constructive spirit, saying that this would be an important contribution by the WTO reflecting its commitment to development.

She urged the WTO membership to take this forward in the General Council on behalf of the Ministerial Conference, and pave the way to spurring the WTO to more such successes.

In a separate statement, USTR Michael Froman welcomed the agreement that was reached between the US and India, saying that it paves the way for full implementation of the TFA.

“On the basis of this breakthrough with India, we now look forward to working with all WTO Members and with Director-General Roberto Azevedo to reach a consensus that enables full implementation of all elements of the landmark Bali Package, including the Trade Facilitation Agreement,” he said.

Two elements

An accompanying factsheet issued by the Office of the USTR cited two key elements of the agreement, which it said will be presented for consideration by the full WTO membership in the near future.

The first is that the TFA “should be implemented without conditions”, on the basis of a standard legal instrument for implementing new WTO agreements, and that if accepted by the full WTO membership, this approach will enable fully multilateral implementation of the TFA.

The second element pertains to the understanding reached between the US and India on implementation of the Bali decision regarding public stockholding for food security purposes. The USTR factsheet said that the bilateral agreement makes clear that a mechanism under which WTO members will not challenge such food security programmes under WTO dispute settlement procedures “will remain in place until a permanent solution regarding this issue has been agreed and adopted.”

[According to the Bali Ministerial Decision of 7 December 2013 on public stockholding for food security purposes, WTO members agree to put in place an interim mechanism, and to negotiate on an agreement for a permanent solution, for the issue of public stockholding for food security purposes for adoption by the 11th WTO Ministerial Conference (in 2017).

[In the interim, until a permanent solution is found, and provided that the conditions set out are met, members shall refrain from challenging through the WTO dispute settlement mechanism, compliance of a developing-country member with its obligations under Articles 6.3 and 7.2(b) of the Agreement on Agriculture (AoA) in relation to support provided for traditional staple food crops in pursuance of public stockholding programmes for food security purposes existing as of the date of the Decision, that are consistent with the criteria of paragraph 3, footnote 5, and footnotes 5 and 6 of Annex 2 to the AoA when the developing member complies with the terms of the Decision.]

According to the USTR factsheet, the bilateral agreement also sets out elements for an intensified programme of work and negotiations to arrive at such a permanent solution.

The factsheet further said that the elements agreed between the US and India will now be discussed with the full WTO membership in the interest of arriving at final and simultaneously agreed decisions in the very near future.

Key pillar

In her statement, Indian Commerce and Industry Minister Sitharaman said that India is a strong supporter of the multilateral trading system and is committed to strengthening it and ensuring that the WTO remains a key pillar of the global economic edifice.

“The WTO is in the best interest of developing countries, especially the poorest, most marginalized ones among them and we are determined to work to strengthen this institution,” she added.

According to the minister, the principles of non-discrimination, predictability, transparency and, most importantly, the commitment to development underlying the multilateral trading system are too valuable to lose.

“Plurilateral trading arrangements, among a few, cannot substitute the multilateral system and are also against the spirit of the fundamental WTO principles of transparency and inclusiveness,” she stressed.

The Doha Development Agenda (DDA) which was agreed in the year 2001 is the very first round dedicated to development. The agenda is a fine balance between market access and development issues.

“We supported the Bali Package but when subsequent developments belied that hope, India had no option but to seek a course correction. India, therefore, took the stand that till there was an assurance of our concerns being addressed, it would be difficult to join the consensus on the Protocol of Amendment for the Trade Facilitation Agreement,” the Indian minister explained.

She noted that the relationship between international trade and food security has been the subject of much debate, and so also, the role of WTO rules in enabling and promoting food security. “While the relevant WTO rules recognize food security concerns, their primary focus is to liberalize agricultural trade rather than to ensure food security. However, the fact is that some of these rules are proving to be a hindrance to food security efforts.”

The minister said that India has reiterated its commitment to the Trade Facilitation Agreement a number of times. “We recognize its value for trade and for that reason we agreed to it in the larger interest of global trade.”

However, she said, for developing countries the benefits may not be commensurate with the associated costs. Implementation of the rest of the Bali decisions will give some comfort to the developing and least developed countries, even though most of the non-binding decisions do not hold out the promise of substantial gains for these countries.

She underlined that India will continue to work for the implementation of the Bali Package and the DDA.

“While there was much media debate and concerns expressed regarding the impact of India’s stand in the WTO, it has undeniably resonated across the world. Many countries saw merit in what we were asking for. India was not alone or isolated. Others were simply not speaking up,” Sitharaman pointed out.

New momentum

In his statement on the agreement reached between the US and India, USTR Froman said: “A year ago at the WTO Ministerial Conference held in Bali, all WTO members, including the United States and India, celebrated the achievement of the TFA and a broader package of measures addressing concerns of all WTO members. Efforts to put the TFA in place were dealt a setback in July, when a small group of countries, led by India, raised concerns about the status of the WTO’s work on food security issues and blocked consensus on implementing the TFA. We have overcome that delay and now have agreement with India to move forward with full implementation.”

“With the WTO confronting a mounting crisis of confidence, [US] President [Barack] Obama and [Indian] Prime Minister [Narendra] Modi held productive discussions on this issue, including during the Prime Minister’s visit to Washington in September. In recent days, officials of both governments worked intensively and reached an agreement that should give new momentum to multilateral efforts at the WTO. In doing so, the United States and India reaffirm their joint commitment to the success and credibility of the WTO,” he added.

In a statement issued from Brussels, European Union Trade Commissioner Cecilia Malmstrom, welcoming the news that the US and India have resolved their differences on the issue, said: “We have achieved an important breakthrough which will lead to the full implementation of the landmark Bali package, including the Trade Facilitation Agreement, the first global trade deal agreed in the World Trade Organization.”

She added that implementation of the TFA will allow the WTO to resume work on other key aspects of the Bali deal, including advancing on the preparation of a work programme for the DDA. “We look forward to resuming the discussions in the WTO in the coming days, to turn these agreements into action.”

In a press release also issued on 13 November, WTO Director-General Roberto Azevedo welcomed the US-India agreement, saying that this breakthrough “represents a significant step in efforts to get the Bali package and the multilateral trading system back on track.”

“It will now be important to consult with all WTO members so that we can collectively resolve the current impasse as quickly as possible,” he added. (SUNS7916)                                        

Third World Economics, Issue No. 580, 1-15 Nov 2014, pp2-3