Jeff Zients, Director of the National Economic Council, who is in Delhi for second “US-India Strategic and Commercial Dialogue” has said that ‘US is ready to increase engagement with India to find new common ground at WTO [World Trade Organization] and asserted that the future looks “bright” for this global trade body.”
Zients who co-chairs the second US-India CEO Forum alongside the US Secretary of Commerce Penny Pritzker further noted that “the last two WTO Ministerial Conferences in Bali and Nairobi were significant successes, including outcomes on the Trade Facilitation Agreement [TFA], agricultural export subsidies, and public stockholding for food security purposes.” These euphoric statements are at substantial variance with what actually transpired at these conferences.
In a brazen display of ‘might is right’ at the 10th ministerial at Nairobi [Kenya] on December 15-19, 2015, the developed countries led by US & EU had junked the Doha Development Agenda [DDA]. In fact, on conclusion of the conference, commerce minister, Nirmala Sitharaman who led Indian delegation had tweeted “Utterly disappointed! A unanimous reaffirmation of DDA has not happened”
Of the 3 critical issues mentioned by Zients in his remarks, only in regard to TFA, there was unprecedented success. But then, this was an area of great importance to developed countries and that is where they focused maximum attention. In fact, they used some concession offered on public stockholding for food security purposes to developing countries to the hilt to get TFA through on fast track.
Did the conference really make any progress on public stockholding for food security purposes, an area of immense concern to developing countries? The answer is a categorical ‘NO’ though this is being touted as a major achievement and now reiterated by US delegation. To get to the bottom of the truth, let us capture a few facts.
At the 9th ministerial in Bali [December, 2013], developed countries had agreed to a ‘peace clause’ under which, if a developing country gives agricultural subsidies in excess of 10% of its agricultural GDP, no member will challenge this until 2017 when WTO would look for a permanent solution to address their food security concerns. This meant that while peace clause would go in 2017, there was no guarantee that permanent solution would be in place by then.
The peace clause came with a plethora of conditions viz., submission of data on food procurement, stockholding, distribution and subsidies (including their computation) etc. These also included establishing that subsidies are not ‘trade distorting’ which is nearly impossible to comply. In other words, even in the interim, any member could challenge if conditions are not met.
The above decision gave no relief. It meant that whereas from 2017 in any case, developing countries would be subject to penal action for exceeding the prescribed subsidy ceiling, even in the interim, they would be in a vulnerable zone, courtesy conditions appended to the clause. US had already started asking India to supply data which tantamount to virtual surveillance on our food security system.
In its meeting held during December 10/11, 2014, the WTO – General Council [GC] approved ‘extension of peace clause till such time a permanent solution is put in place.’ But, it gave only a ‘false’ sense of comfort as the Damocles Sword would still hang because conditions appended to the clause were not dropped. Yet, it gave a handle to developed countries not to work for a permanent solution.
This is precisely what they did in Nairobi Ministerial. They merely agreed that “negotiations on the subject shall be held in the Committee on Agriculture [CoA] in the Special Session, which will be distinct from ongoing agriculture negotiations under DDA”. By taking it out of the purview of negotiations under DDA, they postponed the solution indefinitely. It was like ‘throwing the baby with bath water’.
The special safeguards mechanism [SSM] in agriculture was another area where developed countries merely handed out hollow assurance. The SSM allows members to temporarily raise tariffs to deal with surge in imports and resultant fall in prices. The intent here is to give requisite protection to farmers in the developing countries.
In this regard, the conference came up with a declaration that ‘developing countries will have the right to recourse to SSM as envisaged under the Hong Kong Ministerial Declaration’. This comes nowhere near their demand to amend an already existing provision in Article 5 of the Agreement on Agriculture [AoA] to provide them the same benefit that the developed countries derive from Special (Agricultural) Safeguards [SSG].
With regard to agricultural export subsidies [the third major area of success highlighted by US delegation], here too, the developed countries got away with a commitment from developing countries for aggressive cut in their subsidy support to agriculture and allied activities. A tighter deadline to phase out these subsidies [possibly by 2023] is on cards. At the same time, they did not even let their own huge domestic subsidies to be put on the table for discussion.
The developed countries have also managed a surreptitious entry of new issues like Government procurement, competition policy, link between trade and climate, TRIPs [trade related intellectual property rights] etc when the Nairobi declaration recognizes that “some [in an obvious reference to developed countries] wish to identify and discuss other issues for negotiation, others do not”.
In this back drop and having virtually jinxed the DDA agenda, for US to now opine that ‘it is ready to increase engagement with India to find new common ground at WTO’ does not instill confidence. It is more in the nature of a bonhomie to give an impression that ‘all is well’ in so far as US-India partnership goes.