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1 August 2014, Gateway House

WTO, sovereignty and trade

India's refusal to budge on food security has resulted in the World Trade Organization’s failure to reach the first multilateral trade agreement in the last two decades. Having taken a tough stand can India take the lead, among developing countries, in reframing the power equations of globalisation?

former Gandhi Peace Fellow

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An old tussle between economic globalisation and political sovereignty has once again come to the fore with India’s decision not to ratify the WTO’s Trade Facilitation Agreement (TFA).

This may seem odd because the TFA is essentially meant to smoothen the procedures for goods to cross national borders. Sovereignty has come into the picture because the Indian government has made its ratification of TFA contingent on a simultaneous change in WTO rules that would enable it to continue its food security program.

Much more is at stake here than just the efficiency of customs regimes or subsidised food for the poor.  Having taken a tough stand, India can now take a lead in reframing the power equations of globalisation. But this is a task for Indian business and civic bodies as much as for our government.

But first a quick review of the issues that have come to the fore. Should the new NDA government go back on a promise made by the previous UPA government at the Bali meeting of WTO in December 2013? Is India actually alone in taking this stand? What if the TFA falls apart?

Going strictly by the book, the new government would have to honour the commitments made by its predecessors in an international forum. But in this case, change of regime may not have been the key factor in India’s shift. Earlier this year, various countries and interest groups loudly expressed their doubts about the Bali deal of December 2013, when they realised that issues of vital importance to the developing world are being given low priority while all attention is focused on the TFA.

At Bali, India agreed to a package deal in which the TFA would be ratified by 31 July 2014, while a permanent settlement on making its food security programs compatible with WTO norms would be left pending till 2017. It was a victory for negotiators from India and other developing countries that food security programs are not to be penalised by WTO while a new framework of rules is being drafted over the next four years.

While India is now being criticised by developed nations for changing its position, it is important to note the India is not alone. The Doha Round of talks in the WTO has been a story of deadlocks and missed deadlines. Usually it has been the developed countries that have dug in their heels and repeatedly blocked deals in the WTO.

India’s stand also needs to be seen in the wider context of how norms of human well-being, established in other global fora, are at odds with what the WTO’s framework defines as “trade distortions”. Last year the United Nations Special Rapporteur on the right to food issued a report which lauded the fact that many developing countries have created statutory provisions to ensure right to food.

Having signed the Bali agreement, several of these countries came to doubt if food security issues would actually be resolved in the next four years given that many years of negotiations have not succeeded in shifting the WTO regime towards greater equity and ecological sustainability. For instance, the G-33 coalition of developing countries which includes India and China, have been demanding since 2006 that the WTO reopen and reconfigure its Agreement on Agriculture to serve the interests of the billions of people whose food security is on the edge.

These are essentially concerns about how the WTO’s definition of what constitutes a ‘trade-distorting’ practice, is tilted in favour of the developed countries. In December 2013, an Indian network of farmers’ organisations called the Alliance for Holistic and Sustainable Agriculture (ASHA) issued a statement saying that the Bali agreement does nothing to redress historical wrongs: “… the developed world has rigged the rules from the beginning, that they continue to provide massive subsidies (to their farmers) in various forms … pricing out smallholder producers of the developing world.”

By April this year a conference of the African Union trade ministers asked for the implementation of TFA to be done on a provisional basis, pending the conclusion of the overall Doha Round, which is meant to address equity concerns of developing nations. But later most African nations backed off. A Nigerian official told the Inter Press Service news agency that this withdrawal was the result of “undue pressure from some developed countries”.

While India is the only nation that decided to veto the TFA, many developing nations do want the issue of food security and trade facilitation to be resolved in tandem.

India’s firm stand on keeping the TFA and food security linked must be seen in this larger context. Consequently, various possible scenarios could now take shape.

On July 31, India’s finance minister suggested a compromise that the food security measures be free from WTO penalties until a permanent solution is found. This would free the developing nations from penalties in case no solution is found by the 2017 deadline.

If this compromise solution is accepted then the TFA will go into effect and detailed negotiations on the Doha Development Round will continue.

However, if the TFA is stalled, India will probably be held responsible, by developed nations, for derailing not just the Bali agreement but possibly the Doha Round itself.

India will be at liberty to ignore this exaggerated allegation and work to strengthen efforts by the G-33 nations to forge trade relations that serve the interests of developing nations.

However, this is not just a tussle between the developed and developing nations. It is, instead, a tussle between what has been called the ‘global North’, that is globalised big business and industry, versus the ‘global South’ -the billions of people on this earth who are dependent on the land and on small scale livelihoods.

Contrary to popular opinion, this tussle between global industry and peasantry is not irreconcilable. India could well be the key theatre where the power equation between these segments is reconfigured to create both sustainable and equitable outcomes. Interestingly, this tussle is playing out within the ruling BJP government which has made commitments – both to industry and formations like the Swadeshi Jagran Manch, an RSS network that aims to strengthen indigenous and small scale enterprises.

This internal stand-off between various constituencies within India is a microcosm of the struggle playing out on the international stage of the WTO. These two levels of the global economy may well be one of the most critical fault-lines or battle grounds of both geo-economics and geo-politics.

The Indian government’s stand on the TFA and food security will make much more sense to the world if Indian industry and civil society is seen to be taking a lead in reconfiguring the equation between big players in global markets, and the mass of small farmers and others in the non-corporate sector.

The tussle over the TFA and food security is a skirmish in the long drawn process of re-framing globalisation – making it more equitable in order to make it sustainable.

Rajni Bakshi is the Senior Gandhi Peace Fellow at Gateway House: Indian Council on Global Relations.

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