WTO: Government's tough stand helps clinch deal in its favour

NEW DELHI/BALI: The first significant global trade reform in more than two decades was clinched late Friday night in Bali after India had its way on food security, giving a fresh lease of life to multilateral trade talks under the World Trade Organisation (WTO) that looked to be losing relevance after a series of failures.

The draft agreement is likely to be signed later in the night. The historic deal looks to speed up global trade though standardized customs procedures, boost poor countries' trade and allows developing nations to breach farm subsidy limits if this is for feeding the poor.

The agreement was reached after four days of hectic parleys largely involving India and the US around a 'peace clause' in the rules that proposed a four-year relaxation from the WTO rule that limits farm subsidies to 10% of the total output.

India endorsed the deal after it led G-33 countries to extract an open-ended right to run public stockholding programmes to provide subsidised food to the poor until a lasting solution can be found as opposed to the four-year 'peace clause' offered by the developed world.


The compromise came with many riders including greater scrutiny of food security programmes and an express commitment that such programmes should not distort trade or affect similar initiatives of other members.

It means India's recently passed food security law that proposes to provide highly subsidised foodgrains to more than two-thirds of population will not be questioned by members until a lasting solution is found, the deadline for which is the 11th ministerial. India's food security law had risked breaching the 10% limit agreed to under the agriculture pact. India signed on the dotted line on the trade facilitation measure moved by the developed world while the US had its way on cotton, a decision on which was deferred.

India's Food Bill won't be Questioned

It means India's recently passed food security law that proposes to provide highly subsidised foodgrain to more than two-thirds of population will not be questioned by members until a lasting solution is found, the deadline for which is the 11th ministerial.

India's food security law had risked breaching the 10% limit agreed to under the agriculture pact.

In return, India signed on the dotted line on the trade facilitation measure moved by the developed world while the US had its way on cotton, a decision on which it was deferred.

India's tough stand at the ninth ministerial was seen as a domestic compulsion because of the upcoming general elections, a suggestion Commerce & Industry Minister Anand Sharma had dismissed.

"It is better to have no agreement than to have a bad agreement," Sharma had said on Thursday.

An exultant Sharma said it had been a historic day. "It is a victory for the WTO and for the global community to have arrived at a mature decision," he told reporters. The victory is particularly sweet for India as China and Brazil had not backed New Delhi's hard bargaining, leaving it with only South Africa as a major backer.

Experts had warned that the failure of the Bali talks would render the WTO almost irrelevant, as a string of failures in the Doha Round that began in 2001 forced many big countries to opt for bilateral trade agreements to secure their interests.

The US is negotiating an ambitious 12-nation Trans-Pacific Partnership (TPP) with the European Union, which is itself negotiating pacts with India and others.