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LATEST NEWS UPDATES | India needs to show flexibility at WTO's Bali ministerial as its collapse has long-term consequences

India needs to show flexibility at WTO's Bali ministerial as its collapse has long-term consequences

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published Published on Dec 5, 2013   modified Modified on Dec 5, 2013
-The Times of India


Commerce minister Anand Sharma deserves our sympathy. Driven by the way India's domestic politics is playing out, he is fast emerging as the person who has become the face of the country that, in Bali, threatens to kill WTO's Doha round after 12 years of fruitless negotiations. It need not be this way. India needs to show more flexibility at this moment as long-term consequences of a collapse in multilateral trade negotiations more than offset any putative short-term gain of insulating agricultural subsidies.

The root of the problem goes back to India's food security bill and the so-called peace clause of WTO. Peace clause protects countries offering subsidies to agriculture from being challenged. It limits disputes between countries on account of agricultural subsidies, which is not expected to exceed 10% of production. With passage of food security bill, there is anxiety in India that subsidies may exceed 10% of production on account of government's effort to incentivise farmers. China, with similar challenges, has been flexible and seems willing to accept a four-year peace clause. It leaves India isolated and unpopular on account of what poorer countries lose if Bali's meeting is unsuccessful.

Arguably, the biggest loss of Bali round's collapse would be falling through of a Trade Facilitation Agreement. This seeks to boost cross-border trade by enhancing transparency, harmonising customs procedures and improving trade infrastructure. India could do with more of that. A 1% trading cost reduction could increase worldwide income by over $40 billion.

India should be deeply worried by an increasing number of regional trade agreements, which have received a boost from the world's inability to conclude multilateral trading agreements. The problem with regional agreements is that they are inherently unfair to less developed countries which are not a richer country's first choice partner, something that a multilateral trading agreement avoids. For instance, an US-led initiative to forge a Trans Pacific Partnership, which accounts for about 30% to 40% of global trade, leaves India out in the cold. Multilateral trade agreements are in India's interest as well as that of the world's poorest countries. Sharma and his colleagues in government and even opoosition parties need to be flexible rather than bloody-minded now as it is in our own interest.


The Times of India, 5 December, 2013, http://timesofindia.indiatimes.com/home/opinion/edit-page/India-needs-to-show-flexibility-at-WTOs-Bali-ministerial-as-its-collapse-has-long-term-consequences/arti


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