Know what is WTO's Trade Facilitation Agreement and why India is opposing it

Written by:

Narendra Modi
Putting its foot down, India has reportedly blocked the World Trade Organisation's (WTO) trade facilitation agreement (TFA) which was largely agreed upon in Bali last year. Lowering global trade barriers, decreasing import tariffs and agricultural subsidies were some of the provisions which were discussed last year by the 160-member WTO members in Ninth Ministerial Conference. India has its concern about food subsidy and stockpile of food grains and wants it to be addressed first before signing the TFA. TFA is largely seen as an effort by developed countries to access vast markets of new growing economy of the developing country.

Before jumping to conclusion about whether India is doing right by opposing the TFA agreement or not, we should look at these issues first.

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 is 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.

What was agreed upon in Bali summit?
• Last year in Indonesia, during Ninth Ministerial Conference, largely three issues were taken into account.
• They were Package for Least Development Countries (LCDs), Trade facilitation and agriculture.
• In the meeting, the 160-member WTO had reaffirmed their commitment for duty free and quota free market access for LCDs.

Reactions on the issue:
• Michael Froman, US trade representative told Reuter, "India clearly and forcefully expressed its concern that work proceeds 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".
• "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 told Reuters.
• When asked about the issue, an Indian official told Business Standard, "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".
• According to the Indian Express report, Commerce secretary Rajeev Kher through a statement said that it will be really difficult for India to sign the TFA till WTO members are ready to discuss a permanent solution of food subsidies and stockpiling of food grains.

India's concern
• India is maintaining its bullheaded approach because of two issues, food subsidies and stockpiling of food grains.
• India at present is running a massive food procurement programmes by providing minimum supporting price to the farmers and giving subsidised food to lakhs of BPL families through its public distribution system (PDS).
• The new WTO agreement limits the value of food subsidies at 10 percent of the total food grain production. India is flexing muscle on the issue because subsidies have been calculated by WTO taking 1986 as base year into account which will largely affect food procurement programme through MSP.
• 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.
• India which is home to about 25 percent of the world's hungry, has a viewpoint that it is a Government's responsibility and duty to ensure availability of proper food to its people.
• Moreover, India's food programme is largely domestic so it doesn't distort global food trade. The Indian sources say that once the TFA will be implemented it will be difficult to bargain on the food subsidy thing and that is why India has this brazen attitude.

What is India's strategy?
• India wants that its concerns on food security issues must be addressed by adopting some concrete framework in the direction.
• India might delay on the signing of the agreement and buy out time till December of this year.

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