India is the most prominent of a group of developing nations angry
with rich countries for failing to address their concerns about a
deal on trade facilitation struck by WTO member states in Bali,
Indonesia, last year.
Proponents believe the deal could add $1 trillion to global gross
domestic product and 21 million jobs by slashing red tape and
streamlining customs, eliminating delays at the border that can
often cost more than tariffs themselves.
A failure could prove disastrous for the moribund World Trade
Organization (WTO) and the system of global free trade deals it
As late as Sunday, hopes were high that publicly addressing Indian
concerns during a G20 Trade Ministers meeting in Sydney this past
weekend would give it a face-saving path towards reaffirming its
assent before the July 31 deadline.
India stockpiles food for its poor, citing the need for food
security, but doing so puts it at risk of breaking the rules of the
WTO which worries that the stockpiling of subsidized food can
In Bali, WTO members agreed to give India a pass on its stockpiles
until 2017, while negotiating a permanent solution.
Officials told Reuters that India had not supplied any clear
indication of concessions it wanted, so attempts were made at the
meeting to reassure it that its concerns, whatever they may be, were
"India clearly and forcefully expressed its concern that work
proceed on all fronts, including food stockpiling, and received
assurances that all G20 members are committed to the full
implementation of all Bali agreements on the agreed timetables,"
U.S. Trade Representative Michael Froman told Reuters on Monday.
A confidential "Summary of Discussion" circulated to G20
participants by Australian Trade Minister Andrew Robb obtained by
Reuters details what one official said was an example of India
winning acknowledgment of its concerns.
The document notes that specific Indian concerns about the deal were
raised by the members and pledges to work constructively this week
to address those issues.
In principle, the WTO could pass the agreement on the basis of a
qualified majority, but experts say that would be unprecedented and
virtually impossible in an organization that operates on consensus.
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"India is quite influential, so let's hope that they're going to
back down in some way," Peter Gallagher, an expert on free trade and
the WTO at the University of Adelaide, told Reuters.
But despite reassurances it received at the meeting and in public
afterwards, Indian officials again said on Sunday they had not been
"The way things are moving, there is no way we can agree to the
trade facilitation agreement being pushed by the developed nations
at WTO within the prescribed deadline. Food security has always been
India's main concern and this time we are not going to concede," an
Indian official told Business Standard.
One official involved in the negotiations, speaking under the
condition of anonymity to speak frankly, said the statement was
emblematic of "erratic" Indian behavior over the deal and cast doubt
on its trustworthiness as a negotiating partner.
The row over subsidies has raised fears that the so-called trade
facilitation agreement, the first ever global trade agreement under
the WTO, will be derailed.
A deal was only reached after New Delhi extracted promises that its
concerns related to food subsidies would be addressed and Gallagher
said it was unclear why those concerns were resurfacing now when
they are unrelated to trade facilitation.
(Reporting by Matt Siegel)
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