Victory for India, food security programme intact in Bali deal

  • HT Correspondent, Hindustan Times, New Delhi
  • Updated: Dec 09, 2013 11:17 IST

As a teary-eyed World Trade Organisation (WTO) director-general Roberto Azevedo hailed the landmark trade deal at Bali, Indonesia, on Saturday after five days of gruelling negotiations, it was India, led by commerce minister Anand Sharma, who won plaudits for successfully piloting the grand-bargain for drawing up a permanent solution to food subsidies.

The deal also makes it mandatory for member countries — as part of a trade facilitation agreement — to cut red tape for easier movement of goods.

The benefits to the world economy are calculated to be between $400 billion and $1 trillion by reducing costs of trade by between 10% and 15%, increasing trade flows and revenue collection, creating a stable business environment and attracting foreign investments.

Existing rules capped the value of food subsidies at 10% of the value of production. But the way the support is calculated at prices of more than two-decades ago means many countries would find it more and more difficult to stay within the limit, potentially attracting strong penalties from the trade body.

This was the first major reform agreement in the WTO’s history since it was formed in 1995.

Developed countries initially wanted a package that would allow the flexibility of such subsidies till four years without penalties after which a permanent solution will be worked out.

“The agreement has ensured that millions of poor farmers will feel secure that the minimum support price being given by governments will not be called into question internationally,” an Indian official told HT.

“This is a notable contribution to the democratisation of the WTO. This will be in place till such time a permanent solution is found by the WTO membership which alters the rules of business governing agricultural trade,” the official said.

This bargain was critical for India to enable an unconstrained implementation of the UPA government’s flagship food security programme that legally entitles subsidised food-grains to nearly two-thirds of the population without violating rules defined by the WTO.

The objectives of the trade facilitation deal are: to speed up customs procedures; make trade easier, faster and cheaper; provide clarity, efficiency and transparency; reduce bureaucracy and corruption, and use technological advances.

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