Trade minister Nirmala Sitharaman criticized developed countries for not agreeing to a post-Bali work plan for many of the decisions taken at Bali, including a permanent solution on food security. Photo: Pradeep Gaur/Mint
Trade minister Nirmala Sitharaman criticized developed countries for not agreeing to a post-Bali work plan for many of the decisions taken at Bali, including a permanent solution on food security. Photo: Pradeep Gaur/Mint

New Delhi: India is digging its heels in to pursue its demand for a permanent solution that will entitle poor countries to public stockholdings of foodgrains, and safeguards to protect them from sudden import surges.

The National Democratic Alliance (NDA) government made its stand clear ahead of a ministerial meeting of the World Trade Organization starting in Nairobi on 15 December.

India’s strong position may thwart attempts by developed countries to wind up the 14-year-old Doha Development Round in the Kenyan capital to move on to a new round of negotiation.

The country was involved in an acrimonious face-off with advanced economies in the multilateral trade body last year, forcing the WTO to amend an agreement and committing it to an indefinite interim solution on public stockholdings for food security. The original agreement had envisaged an interim solution for a period of four years.

“Even though we have a peace clause in place, a permanent solution was agreed to be delivered post-Bali. So that can’t be a negotiable instrument. That will be part of my draft ministerial declaration. It should in fact be in the WTO draft itself, not just India’s draft,” trade minister Nirmala Sitharaman said on Monday.

“How can I be seen as an obstructionist if I insist on what is agreed at Bali (Indonesia) to be fulfilled? The spirit of Bali should be respected. I am not asking for anything new,” she added.

The issue of food security and farm subsidies are politically sensitive issues in India, given that around 58% of India’s rural households depend on agriculture while over 22% of its population live below the poverty line. After Prime Minister Narendra Modi came to power in May 2014, he took a strong exception to the four-year peace clause agreed at a ministerial meeting in Bali, Indonesia, in 2013, under which developing countries cannot be legally challenged if they breach the WTO ceilings on public stockholding for food security purposes.

Modi threatened to stall the trade facilitation agreement (which is aimed at easing customs rules for cross-border flow of goods) and forced developed countries, led by the US, to change the Bali agreement to include a permanent peace clause for developing nations. WTO members also agreed to “engage constructively” for a permanent solution on the matter by the end of 2015.

India is also insistent on a permanent solution as the present peace clause does not allow it to expand its food security programme to new areas. Sitharaman said items covered in the public distribution programme vary from state to state.

“India has a public distribution system where some states give edible oil, sugar in addition to grains. In some states, even the grains vary,” she added.

Sitharaman criticized developed countries for not agreeing to a post-Bali work plan for many of the decisions taken at Bali, including a permanent solution on food security.

Asked if India will refuse to negotiate at Nairobi without a work agenda in hand, Sitharaman said, “Nothing while negotiating can be so black and white. I am making my wish list clear.”

On attempts by developed countries to differentiate among developing countries by putting emerging economies like India and China in a different league, Sitharaman said such categorization does not work. That’s because developing countries have a lot of gap to cover when it comes to ensuring a respectable living standard for all their citizens.

“We are still struggling to provide basic infrastructure to all our people. Therefore, to treat us different from other developing countries is too early and too soon,” she said.

On a special safeguard mechanism (SSM) that will allow developing countries to raise tariffs temporarily to deal with import surges or price falls in certain commodities, Sitharaman said it should not be difficult to agree to such a system.

Sitharaman said since the constant endeavour is to bring down tariffs, SSM is the only option left for developing countries to protect themselves from a surge in imports.

“So logically speaking, SSM is absolutely consistent (with WTO principles) and a fair demand,” she added.

Asked what India can offer in return for an SSM to developed countries for a balanced outcome, Sitharaman said it depends on what they ask: “They have not asked us anything so far.”

On whether export competition, which developing countries use to provide certain export subsidies, can be a counter-balance to SSM, Sitharaman said export competition includes agricultural goods too. “If you are giving it away, then you are giving away that little protection available,” she said.

India’s chief trade negotiator Arvind Mehta said there was no consensus on non-agricultural market access, so it is unlikely to be put on the table as a counter-proposal to SSM.

When asked whether India will agree to a proposal for a new round of negotiations where its concerns will be addressed, Sitharaman said she would wait for any such proposal to be made. She said developed countries are right to point out that the Doha round had not delivered after 14 years of negotiations, but developing countries too are right in adopting the stand that their concerns be reflected in the Doha round. “We need a positive outlook in dealing with issues before us, not only India but all participant countries. Both are right,” she added.

“But you cannot just by changing the framework expect that you will have a better opportunity to fulfil their developmental agenda,” she added.

On implementing the trade facilitation agreement agreed upon in Bali, Sitharaman said India had clearly said it was in favour of it and will ratify it once the cabinet clears it.

Asked about India’s stand on the so-called 21st century issues such as global value chain, labour and government procurement that developed countries want to discuss under the current framework, Sitharaman said India was fine with new issues as long as they are only for discussion and not for binding commitments.

Biswajit Dhar, a professor in economics at Jawaharlal Nehru University, said India will achieve nothing by going to Nairobi with a defensive approach.

“If we have support from over 100 countries as claimed by India’s trade secretary (Rita Teaotia) last week, we should be setting the agenda at WTO. We should be taking on farm subsidies by developed countries more aggressively and should not be defensive about our justified subsidies,” he added.