India’s decisive stand
last week not to adopt the protocol of amendment of the trade facilitation
agreement (TFA) unless credible rules were in place for the development issues
of the South was met with “astonishment” and “dismay” by trade diplomats
from the North, who described New Delhi’s as “hostage-taking” and “suicidal”.
It obviously came as something of a shock for representatives of
Northern interests that any party should have the brass neck to place the
interests of its constituents on the negotiating table.
After all, why should such banal issues as food security and poverty
get in the way of a trade agenda heavily weighted in favour of the
industrialised countries?
New Delhi was demanding nothing
more than credible global trade rules to ensure that “development,” including
the challenges of poverty, in the countries of the South take precedence over
the cut-throat mercantile business interests of the transnational corporations
in the North
In fact, it was India’s firm stand for permanent guarantees for public
stockholding programmes for food security that turned this trade agenda upside
down at the World Trade Organization (WTO) last week, putting paid to the
adoption of the protocol of amendment for implementation of the contested TFA
for the time being.
India and the United States failed Thursday at the WTO to reach
agreement on construction of a legally binding decision on a “permanent peace
clause” that would further strengthen what was decided for public distribution
programmes for food security in developing countries at the ninth
ministerial meeting in Bali, Indonesia, last year.
The Bali decision on food security was one of the nine non-binding best
endeavour outcomes agreed by trade ministers on agriculture and development.
For industrialised and leading economic tigers in the developing world,
the TFA – which would harmonise customs procedures in the developing world on a
par with the industrialised countries – is a major mechanism for market access
into the developing and poorest countries.
The failure to reach agreement came during a closed-door meeting
between India and the United States organised by WTO Director-General Roberto Azevedo
in an attempt to break the impasse between the world’s two largest democracies.
New Delhi was demanding nothing more than credible global trade rules
to ensure that “development,” including the challenges of poverty, in the
countries of the South take precedence over the cut-throat mercantile business
interests of the transnational corporations in the North.
Trade diplomats from several developing and poorest countries in
Africa, South America, and Asia say India’s “uncompromising” stance will force
countries of the North to return to the negotiating table to address the
neglected issues in the Bali package concerning agriculture and development.
These issues are at the heart of unfinished business in the Doha
Development Agenda (DDA) negotiations, the current round of trade
negotiations aimed at further liberalising trade.
“It is important to keep the battle alive and India has ensured that
the big boys cannot simply walk away with the trade facilitation agreement
(TFA) without addressing the concerns on food security and other major issues,”
one African official said.
The industrialised countries and some rising economic tigers in the
developing world are unhappy that they cannot now take home the TFA without
addressing the problem raised by India and other developmental issues in the
Doha Development Agenda negotiations.
Many developing and poor countries in Africa and elsewhere were opposed
to the TFA but they were “arm-twisted” and “muzzled” by the leading super
powers over the last three months. African countries, for example, were forced
to change their stand after pressure from the United States, the European Union
and other countries.
The TFA was sold on false promises that it would add anywhere up 1
trillion dollars to the world economy. During the Bali meeting last year, the
Economist of London, for example, gave two different estimates – 64 billion
dollars and 400 billion dollars – as gains from the TFA, while the
International Chamber of Commerce gave an astronomical figure of 1 trillion dollars
without any rational basis.
“Those predicted gains [from TFA] evaporate when one looks at the
assumptions behind them, such as the assumption that all countries in the world
would gain the same amount of income from a given increase in exports,” said Timothy
A. Wise and Jeronim Capaldo, two academics from the Global Environment and
Development Institute at the U.S. Tufts University.
At one go, the TFA will provide market access for companies such as
Apple, General Electric, Caterpillar, UPS, Pfizer, Samsung, Sony, Ericsson,
e-Bay, Hyundai, Huawei and Lenova to multiply their exports to the poorest
countries.
It would drive away scarce resources for addressing bread-and-butter
issues in the poor countries and direct them towards creating costly trade-related
infrastructure for the sake of exporters in the industrialised world.
Here are ten reasons why trade diplomats from the developing and
poorest countries say India’s stand will bolster their development agenda:
1. India’s stand on food security brings agriculture,
particularly unfinished business in the DDA negotiations, back to centre-stage.
2. The Doha trade negotiations were to have been concluded by
2005 but remain stalled because a major industrialised country put too many
spanners in the negotiating wheel.
3. Major industrialised countries have been cherry-picking issues
from the DDA which are of interest to them while giving short shrift to core
“developmental” issues.
4. Issues agreed in the Doha negotiations, such as the ”July package” agreed on August 1, 2004,
the Hong Kong Ministerial Declaration of December 2005
and the un-bracketed understandings of the December 2008 Fourth Revised Draft Modalities for Agriculture,
have all been pushed to the back burner because one major country does not want
to live up to them.
5. The Fourth Revised Draft Modalities for Agriculture provided
an explicit footnote to enable the developing countries to continue with their
public stockholding programmes for food security. That footnote was the result
of sustained negotiations and a compromise solution among key WTO members such
as the United States, the European Union, India, Brazil, Australia and China,
but the United States refused to accept the footnote because of opposition from
its powerful farm lobbies.
6. Trade-distorting practices in cotton which are harming
producers in Benin, Burkina Faso, Mali and Chad are supposed to be addressed
“ambitiously”, “expeditiously” and “specifically” by the distorting countries
in the North. But cotton is now being swept under carpet because a major
industrialised country does not want to address the issue because of its farm
programme.
7. Trade facilitation was one of the Doha issues but not the main
item of the agenda at all. It was actually dropped from the Doha agenda
in Cancun, Mexico, in 2003 and was brought back in 2004 due to pressure from
the United States and the European Union. The core issues of the Doha agenda
were agriculture, services and developmental flexibilities.
8. A major industrialised country which pocketed several gains
during the negotiations refuses to engage in “give-and-take” negotiations based
on the above mandates and has turned the Doha Round upside down.
9. Industrialised countries along with some developing countries
have formed a coalition of countries willing to pursue what are called
“plurilateral” negotiations, only to undermine the DDA negotiations which are
multilateral and based on what is called a “single undertaking” (that is,
nothing is agreed until everything is agreed). Currently, these countries are
negotiating among themselves on services, expansion of information technology
products and environmental goods even though these issues are being negotiated
in the Doha Round.
10. Delay in the adoption of protocol will pave way for a healthy
debate to reinvigorate the multilateral trading system which is being undermined
by those who created it in 1948. The developing and poor countries want
credible and balanced multilateral trading rules to replace what was agreed
over 25 years ago in order to continue their “developmental” programmes with a
human face.
Herein lies the crux of the issue – are the major powers of the North
prepared to go along with a global trading system that puts the interests of
the majority of the world’s people before their own interests? By Ravi Kanth
Devarakonda
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