WTO reaches deal to boost global trade

After five days of hard negotiations, the WTO on Saturday reached a historic deal designed to ease movement of goods across countries and allow developing nations more options to feed their poor – as India successfully lobbied in favour of state-funded welfare schemes.

After five days of hard negotiations, the World Trade Organisation (WTO) on Saturday reached a historic deal designed to ease movement of goods across countries and allow developing nations more options to feed their poor – as India successfully lobbied in favour of state-funded welfare schemes.

“For the first time in our history, the WTO has truly delivered,” WTO director-general Roberto Azevedo broke down while announcing the deal to exhausted trade ministers at Bali after the talks stretched into an extra day on the Indonesian island resort.

“This time the entire membership came together. We have put the ‘world’ back in World Trade Organisation,” Azevedo said.

“We’re back in business... Bali is just the beginning.”

The deal will allow an unhindered roll-out of the UPA government’s flagship food security programme that legally entitles subsidised foodgrains to nearly two-thirds of the population without violating rules defined by the WTO.

Leading the high-level Indian delegation, commerce and industry minister Anand Sharma described the accord in Bali as “a triumph for millions of subsistence farmers throughout the world.”

The deal was hammered out after days of hard bargaining by 159 ministers, with India placing the need for ensuring food and livelihood security of millions of poor people at the heart of the trade talks.

This is the first-ever trade reform deal agreed upon by the 159-member countries of the WTO after it was set up in 1995.

A study by the Washington, DC-based Peterson Institute of International Economics estimated the agreement would inject $960 billion into the global economy and create 21 million jobs – 18 million of them in developing countries.

As India held firm on its position that food security was non-negotiable, hectic parleys that ran late into the night over the past two days witnessed a softening of positions by developed countries on food subsidies.

India led the bargain for drawing up a permanent solution to food subsidies. 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.

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.

Sharma’s stance in the first three days of the conference faced strong headwinds in Bali with developed nations opposing a lasting agreement on food security.

India, however, made it clear that it would rather take the blame for collapse of the talks than accept a package that can potentially hurt its poor and small farmers.

The deal will also make it mandatory for countries to substantially reduce red-tapism and procedural delays at customs around the world as part of a trade facilitation agreement.

Indian business leaders welcomed the deal.

“We are very happy with the agreement on trade facilitation that would help reduce transaction costs, cut red tape, improve transparency, and simplify and streamline customs and port procedures, among other things,” said Naina Lal Kidwai, president of industry body Ficci.

A WTO statement said, “The objectives 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. It also has provisions on goods in transit, an issue particularly of interest to landlocked countries seeking to trade through ports in neighbouring countries.”

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