Food Security Uncertainties after Bali

The Government of India claims "victory" at the WTO; it has only bought time.

For two decades now, every major ministerial meeting of the World Trade Organisation (WTO) has ended with two identical announcements. One is for the India’s minister of commerce at the time to announce that the country has been successful in protecting its interests. The second is for the WTO head at the time to announce that a balanced agreement to the benefit of all countries has been reached. Both statements have always been false, or at best half-truths. The same performance was played out earlier this month at Bali, Indonesia, at the end of the ninth ministerial conference of the WTO. India claimed “victory”, when, using the same language of sports, it would be more correct to
say that at best it came away with a draw, or worse, half a defeat. The WTO claimed the world’s poor would benefit from Bali, when in actual fact it oversaw a set of trade agreements that had “imbalance” written all over them with the developed countries walking away with the biggest gains.
For India, the most important item on the agenda was to ensure that its current public distribution system (PDS) as well as the new food security programme under the National Food Security Act (NFSA) would not have to be curtailed if the food subsidy breached the ceilings decreed by the WTO’s 1994 Agreement on Agriculture (AoA). While the AoA does permit governments to operate public stockholding programmes and provide foodstuffs to the poor at subsidised rates, the provisions of that agreement were sufficiently ambivalent to cause concern. For the past few years, India, as a member of the Group of 33 coalition at the WTO, has been demanding that the rules on public distribution programmes, particularly the manner in which the food subsidy is measured on the basis of outdated reference prices of 1986-88, must be changed.
Yet, before Bali it seemed that the best the major trading blocs such as the United States (US) and the European Union (EU) were willing to offer developing countries was a two-year “peace clause” during which food security programme that crossed AoA ceilings would not be taken before the WTO’s Dispute Settlement Body. In the event India’s refusal at Bali to accept the peace clause option allowed it to extract some measure of protection. What has been agreed is that no developing country’s food security programme can be questioned at the WTO, pending negotiation of a permanent solution before the WTO’s 11th ministerial meeting four years hence. This is still only a reprieve, even if better than the peace clause option, for it leaves India with the Herculean task of negotiating an agreement which would either keep food security programmes altogether outside WTO disciplines, or substantially raise the permissible food subsidy, or revise the methodology for measuring the subsidy. Even if such a deal were to be negotiated, what price would India and other developing countries have to pay and where?
The text of the agreement makes it clear that subsidies provided under public food stockholding programmes will not, for now, be questioned for any violation of the AoA, but it does not explicitly state that they will also be excluded from the purview of another WTO agreement, that which places limits on subsidies. This is important for such twin protection was provided to the EU and the US under another peace clause inserted into the 1994 AoA and which was in place for 10 years. So it is yet possible for India to find its expanded PDS under challenge at the WTO for violating the 1994 Agreement on Subsidies and Countervailing Measures. When compared to the 2001 Doha Declaration on TRIPS and Public Health, an agreement that made explicit the freedom that developing countries had under the WTO, the Bali text does indeed look weak.
At Bali, India, along with all the other members of the trade body also had to sign up for a comprehensive agreement on trade facilitation. This WTO deal calls on countries to, broadly speaking, simplify customs procedures to permit the smoother flow of goods across borders. This was of great interest to the US for it is \essentially another route to gain greater access to markets in other countries. In order to adhere to the new agreement, the developed countries will have to make minimal changes to their laws and only modest investments, the opposite will be the case for all developing country members, including India. The trade facilitation is a concrete “achievement”, of benefit to the developed world. But on the other side, the least developed countries and other developing countries were only given what are called “best endeavour” texts, i e, promises to address their concerns in subsidies, import tariffs and market access. This is the larger imbalance at Bali, an imbalance which has always marked the working of the WTO.
The WTO was seen in recent years as a moribund organisation unable to conclude the 12-year-long Doha round of trade negotiations. The ninth ministerial conference showed that there is life yet in the WTO – when the developed world wants to use it to advance its interests. The Government of India, for its part, will have to explain why it left it to the very end to salvage some protection to the NFSA. Could it be that in all the cosying up to Washington, New Delhi signalled that this was an area where it was willing to accommodate US interests, only to wake up at the last minute to the political costs that such a decision would entail?