Asserting its real concern of food subsidies, India on Thursday blocked the Trade facilitation agreement. The TFA is the first global trade reform since the creation of WTO 19 years ago.
Though trade diplomats in Geneva have termed this step of India as regressive and suicidal but India has made its position clear that first address our issue (food subsidies) then only we( some of the developing countries) will sign the TFA deal which was agreed upon last year in Bali, Indonesia.
While meeting with US Secretary of State John Kerry, Prime Minister Narendra Modi clearly stated that Developing countries have a big challenge to tackle the poverty and its Governments' duty to address the problem facing by these deprived section of people. Prime Minister told Kerry, "While we don't oppose the agreement, we believe that the needs of those living on the margins of society, not just in India but elsewhere too, have to be addressed".
The Issue so far
• India has said no to WTO pact (July 31 was deadline) which was meant to ease worldwide customs rules.
• Though India has sent out feeler saying that if WTO members agree its parallel demands for concessions on stockpiling food, they will sign the pact.
• According to ET report, New Delhi has suggested that the interim relief on breach of the 10 per cent food subsidy cap "should continue till a permament solution is found.
• The unconfirmed sources say that India could sign TFA agreement in September.
• US Secretary of State John Kerry, who is currently on India visit, has said that India's refusal will undermine its image on global map.
• After India's refusal some countries, including US, Australia and Japan wants India to be excluded from the deal which is vociferously opposed by New Zealand.
What India wants?
• India wants its parallel demand of food subsidy be heard along with TFA deal.
• New WTO rules limit the value of food subsidies at 10 percent of the total food grain production considering 1986 as the base year.
• India is opposing it saying the rule with which food subsidies is being limited is outdated.
• India is raising its concerns by saying that while US is providing 120 billion as agriculture subsidy then why India can't give even one tenth (USD 12 billion) to their farmers.
• According to Mumbai Mirror, For 500 million farmers in India the food subsidy bill is barely 15 billion dollars. Whereas the USA spends 120 billion dollars to support its 3 million farmers.
• India is home to about 25 percent of the world's hungry and they depend upon Government's subsidized food programme.
• India provides food subsidies through programme under Food security Bill and PDS system.
• Last year WTO members in Bali had agreed upon the temporary solution of this food subsidy and pledged to work towards a permanent solution within four years, by the end of 2017.
• Reports say that India now doesn't want to wait till 2017 and wants permanent mechanism in place in the direction.
What is TFA and controversy surrounding it?
• Trade facilitation agreement (TFA) is a trade protocol aiming to give a spur and do away with the stumbling blocks in doing international trade between various countries.The deadline to sign the agreement was July 31 and the deal has to come into force fully by 2015.
• It is being believed, especially by the proponents of the agreement that deal could add $1 trillion to global GDP and also can generate 21 million jobs by slashing red tape and streamlining customs.
• The developing country especially India and South Africa wants that before pushing for this TFA thing why WTO don't discuss and allay our concern on food subsidy which is a lifeline for lakhs of BPL people in these countries.
• To supervise and facilitate international trade, the World Trade Organization (WTO) was established in 1995.
• WTO, which has 160 members at present, replaced General Agreement on Tariffs and Trade (GATT) formed in 1948.
• India has been a founding member of GATT since it's inception.
• WTO provides right to veto to all its member unlike United Nations, IMF or World Bank.
• Not even a single deal has been signed in WTO's nineteen-year history.
• In 2001 Doha Round, WTO tried to get consensus on range of issue including manufacturing, services and agriculture tariffs but remained unsuccessful.
• After that in Bali summit in 2013, again member countries disagreed upon TFA and other issues.
What will be the impact after TFA deal fails?
• India will be isolated on the matter as big developing countries such as China, Brazil and closest neighbour Pakistan, are chief opponents of India's veto.
• Business friendly image of Prime Minister will get a blow.
• After the failure of the deal, new regional trade agreements like Trans-Pacific Partnership might get a boost.