A World Trade Organization pact to ease worldwide customs rules
collapsed late on Thursday over India's demands for concessions on
"Failure to sign the Trade Facilitation Agreement sent a confusing
signal and undermined the very image Prime Minister Modi is trying
to send about India," a U.S. State Department official told
reporters after Kerry's meeting with Modi.
Kerry was in New Delhi as part of an annual strategic dialogue to
revitalize ties and lay the ground for a visit by Modi to Washington
The official said the meeting was "strong and positive" despite the
breakdown at the trade talks in Geneva.
Several WTO member states voiced frustration after India's demands
led to the collapse of the first major global trade reform pact in
two decades. WTO ministers had already agreed the global reform of
customs procedures known as "trade facilitation" in Bali, Indonesia,
last December, but were unable to overcome last minute Indian
objections and get it into the WTO rule book by a July 31 deadline.
"We have not been able to find a solution that would allow us to
bridge that gap," WTO Director-General Roberto Azevedo told trade
diplomats in Geneva, just two hours before the final deadline for a
deal lapsed at midnight (18.00 a.m. EDT Thursday).
Most diplomats had expected the pact to be rubber-stamped this week,
marking a unique success in the WTO's 19-year history which,
according to some estimates, would add $1 trillion and 21 million
jobs to the world economy.
They were shocked when India unveiled its veto and the eleventh-hour
failure drew strong criticism, as well as rumblings about the future
of the organization and the multilateral system it underpins.
"Australia is deeply disappointed that it has not been possible to
meet the deadline. This failure is a great blow to the confidence
revived in Bali that the WTO can deliver negotiated outcomes,"
Australian Trade Minister Andrew Robb said on Friday. "There are no
winners from this outcome – least of all those in developing
countries which would see the biggest gains."
Kerry held out hope that there was a way forward that both addressed
India's concerns about its food security program as well as advance
global trade liberalization.
India had insisted that, in exchange for signing the trade
facilitation agreement, it must see more progress on a parallel pact
giving it more freedom to subsidize and stockpile food grains than
is allowed by WTO rules.
India's new nationalist government has insisted that a permanent
agreement on its subsidized food stockpiling must be in place at the
same time as the trade facilitation deal, well ahead of a 2017
target set in Bali last year.
MOVE ON WITHOUT INDIA
Some countries have already discussed a plan to exclude India from
the facilitation agreement and push ahead regardless.
An Australian trade official involved in the talks, who requested
anonymity to speak more candidly, said officials were exhausted with
the process and that there was already discussion about major
reforms at the WTO and the Doha Round of trade negotiations, which
began in 2001.
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"Some see it as a final trigger for ending Doha and pressing ahead
with plurilateral reform, leave behind those that don't want to come
along," he said.
Some nations, including the United States, the European Union,
Australia, Japan and Norway, have already discussed a plan to
exclude India from the agreement and push ahead, officials involved
in the talks said.
A Japanese official familiar with the situation said that while
Tokyo reaffirmed its commitment to maintaining and strengthening the
multilateral trade system, it was frustrated that such a small group
of countries had stymied the overwhelming consensus.
"The future of the Doha Round including the Bali package is unclear
at this stage," he said.
New Zealand Minister of Overseas Trade, Tim Groser, told Reuters
there had been "too much drama" surrounding the negotiations and
added that any talk of excluding India was "naive" and
counterproductive. "India is the second biggest country by
population, a vital part of the world economy and will become even
more important. The idea of excluding India is ridiculous."
"I don't want to be too critical of the Indians. We have to try and
pull this together and at the end of the day putting India into a
box would not be productive," he added.
Still, the failure of the agreement should signal a move away from
monolithic single undertaking agreements that have defined the body
for decades, Peter Gallagher, an expert on free trade and the WTO at
the University of Adelaide, told Reuters.
"I think it's certainly premature to speak about the death of the
WTO. I hope we've got to the point where a little bit more realism
is going to enter into the negotiating procedures," he said.
"It's 153 countries. We can't all move at the same speed on the same
things, and it's time to let those that want to do it, do it."
(Additional reporting by Rajesh Kumar Singh, Manoj Kumar and Sanjeev
Miglani in New Delhi, Linda Sieg in Tokyo, Gyles Beckford in
Wellington and Krista Hughes in Washington DC; Editing by Ian
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