WTO meet begins on Tuesday, high stakes for India's food programme

Ministers and trade diplomats from 159 countries will get into tough negotiations at the WTO Ministerial meeting beginning in Bali on Tuesday with India seeking a deal on farm subsidies that will enable it to implement its USD 20 billion food security law without attracting any multilateral scrutiny.

As hard bargains continue for the next four days at the picturesque tourist resort of Indonesia, the ministers, including from the influential developed countries will try and reach agreements on providing windows to the developing nations for their food security programmes and a pact to free the global trade from the procedural hassles at the customs .

This agreement is being pushed by the US and other developed world as they seek to bolster their sagging economies through an unhindered international trade by way of a uniform and easy procedures at customs. The proposed deal is billed to be one that has a potential to boost the world trade by USD one trillion.

"Measures on  Trade Facilitation  to streamline customs procedures and minimise unnecessary border delays, delivering jobs and opportunities in times of unemployment and slow growth are estimated to be worth up to USD 1 trillion per year for the global economy," WTO Director General Roberto Azev do said in his communication to journalists covering the WTO Ministerial Meeting, the highest policy  making organ of the multilateral organisation.

While talks in Geneva in the run-up to Bali meeting were deadlocked after tough posturing by India and the US, Azevedo said, he has not given up.

"I would like to assure these countries and indeed all WTO members that I have not given up on securing the Bali package and will be working with all delegations in Bali to get an agreement that secures a successful outcome for the meeting and a promising future for the multilateral trading system" he has said.

While India and several other developing countries have problems with the trade facilitation deal as it involves huge costs and penal action, the negotiating team from New Delhi, headed by Commerce and Industry Minister Anand Sharma, has the mandate to dilute its stand on this issue.

This is in return for a pact that will allow its ambitious food security law for providing highly subsidised foodgrains to its 800 million people as also continuation of the support price for the farmers, sources said.

As per the existing Agreement on Agriculture of the Geneva-headquartered WTO, farm subsidy has to be capped at 10 per cent of the total value of the farm production. India has raised issues regarding the way the cap value is benchmarked to the base price.

"As far as what we give to our poor people, that is our right and that is insulated in entirety from any multilateral negotiations or WTO negotiations. That is the sovereign space and for India it is sacrosanct and non-negotiable," Sharma has said after receiving a negotiating mandate from the Union Cabinet.

The proposal on the table by the rich nations, particularly the US, which allows an interim window of four years, through the so-called  Peace Clause  is not acceptable to India and several other countries as they seek a permanent solution to the issue of farm security. India is pinning hopes on wide support from the grouping of G-33 which includes China and Indonesia.

However, given the political compulsions back home in an election year, sources said India would prefer a "no deal to bad deal" from New Delhi's point of view, especially with regard to farmers, sources added. If the choice has to be made between a political capital back home and the country getting an image of the fall guy and deal breaker, the Indian negotiators would prefer the former, the sources pointed out.

Developed nations including the US and Canada are not agreeable to the G-33 proposal contending that offloading of the stock piled food grain in the international market would distort the global prices of agriculture commodities.

However on this issue, Commerce and Industry Minister Anand Sharma has made it clear that commodities bought under the public procurement would not be released for global trade.

Developing countries including India is demanding amendment in the AoA (Agreement on Agriculture), as the subsidy cap under the agreement was calculated on 1986-88 reference price.

"We are persistently demanding that this needs to be corrected because since 1986-88, the prices including the MSP have gone up many fold," Sharma had said.

India also wants protection from challenge under the WTO Agreement on Subsidies and Countervailing Measures (ASCM). As protection under this pact was ended in 2004, India is apprehensive that this would also cast a shadow on its food security plan. The proposed  peace clause  is not completely immune to challenges and can always be disputed under the ASCM.

Although talks at negotiators level had failed in Geneva, the WTO headquarters, officials are hoping that developed and emerging economies would bridge their differences on the two key issues - food security and trade facilitation.