Negotiations for the first major global accord in the World Trade Organisation’s 19-year history which would have standardised customs rules, collapsed today over food-subsidy objections raised by India. Negotiators for a Trade Facilitation Agreement at WTO headquarters in Geneva failed to agree as a midnight deadline passed to implement part of the accord by the end of July as India refused to proceed without assurances the pact would allow it to keep protections for its domestically produced food.
“We tried everything we could. But it has not proved possible,” WTO director-general Roberto Azevedo, said in a statement. WTO ministers had already reached agreement on the global reform of customs procedures known as ‘trade facilitation’ last December in Bali, but it needed to be put into the WTO rule book by 31 July.
Most diplomats saw that as rubber-stamping a unique success in the WTO’s 19 year history, which according to some estimates would add US$1 trillion and 21 million jobs to the world economy and were caught off guard by India’s veto of the agreement.
Logistics and supply chain sectors had trumpeted the Bali agreement as a crucial step in enabling freer trade that would bring welcome relief to their industry. “This is a tragic failure,” said Agility CEO Tarek Sultan. “Virtually every trading nation stood to benefit from this deal, which would have added up to $1 trillion to the world economy. There simply are too many obstacles to the flow of goods across borders – and they benefit no one.
“If you remove obvious barriers and take basic steps to improve efficiency in the trading system, you create growth, jobs and prosperity. The biggest losers today are the developing countries of Africa, Asia and Latin America that stood to gain the most by becoming fuller partners in the global economy,” said Sultan.
The Bali agreement, which was agreed to by Indian Prime Minister Narendra Modi’s predecessor, lets India and other developing countries subsidise food staples so long as they don’t distort trade. Members also agreed to negotiate a permanent solution for adoption at a meeting scheduled for 2017. India’s new nationalist government has insisted that a permanent agreement on its subsidised food stockpiling must be in place at the same time as the trade facilitation deal, well ahead of a 2017 target.
Observers have now questioned whether this key failure jeopardises the ability of the WTO to serve as a forum for international accords as well as its status an arbiter of trade disputes.
