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LATEST NEWS UPDATES | WTO standoff: India may lose 'Peace Clause' if Bali pack fails -Nayanima Basu

WTO standoff: India may lose 'Peace Clause' if Bali pack fails -Nayanima Basu

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published Published on Jul 28, 2014   modified Modified on Jul 28, 2014
-The Business Standard


In its effort to safeguard the rights of its poor by blocking the World Trade Organization's (WTO's) trade facilitation agreement (TFA), India might lose out on securing a deal on food security, including the much-needed 'Peace Clause' agreed on during WTO's Ninth Ministerial meeting in Bali, Indonesia.

WTO members have threatened that if the so-called Bali package gets derailed, every single issue that was negotiated and on which a consensus was achieved during the December 2013 talks would "face an imminent collapse".

This emerged during the closed-door meetings that continued at the WTO headquarters in Geneva on Saturday, after the General Council (GC) got suspended for next week for not being able to reach an agreement over TFA adoption.In its effort to safeguard the rights of its poor by blocking the World Trade Organization's (WTO's) trade facilitation agreement (TFA), India might lose out on securing a deal on food security, including the much-needed 'Peace Clause' agreed on during WTO's Ninth Ministerial meeting in Bali, Indonesia.

WTO members have threatened that if the so-called Bali package gets derailed, every single issue that was negotiated and on which a consensus was achieved during the December 2013 talks would "face an imminent collapse".

This emerged during the closed-door meetings that continued at the WTO headquarters in Geneva on Saturday, after the General Council (GC) got suspended for next week for not being able to reach an agreement over TFA adoption.

"What member-countries have said is that if one issue is discarded, this will be the case for the whole package, including the Peace Clause, to be dropped. This is serious," a senior trade negotiator present for the GC meeting in Geneva, asking not to be named, told Business Standard.

The deal agreed during the Ninth Ministerial was that TFA will be signed into a protocol by July 31, 2014, and fully implemented by July 2015. It was also agreed that a permanent solution towards food security would be achieved by 2017. Meanwhile, developing countries like India would be allowed to run their public food stockholding programmes that result in trade-distorting subsidies. Such an interim measure, termed the 'Peace Clause', would safeguard them from being legally challenged for this at the multilateral forum by other member-countries.

Thus, some member-country representatives with whom Business Standard spoke to hinted that in the event the TFA gets postponed, so would the Peace Clause.

However, the Government of India, till the time of going to press, remained firm on its stance of not backing the TFA within the July 31 deadline, unless there were negotiations on the food security issue. TFA, it is estimated, could give a $1-trillion boost to the global economy by reducing transaction costs, through streamlining customs procedures across international borders and facilitating smoother movement of goods.

A highly placed official in the ministry of commerce and industry told Business Standard that the government was not perturbed by the threats, coming from a wide range of countries. It was firm that it would hold its ground, even if this meant getting cornered at WTO and risking the Peace Clause.

At the suspension of the GC meeting, under the chairmanship of Canada's WTO ambassador Jonathan Fried, it was decided the body would reconvene only if member-countries were ready to strike a compromise.

"If the (GC) chair receives indications there are grounds to reconvene the meeting next week, he will so do. If he receives no indication that members are prepared to adjust their position on this (TFA) issue by midnight of July 31, it will consider this agenda closed and the GC adjourned. What will happen after that is uncertain," said another official present in Geneva for the meeting.

However, some officials here believe the Peace Clause has been so designed that it will be difficult for India to utilise it till 2017 or until a permanent solution is reached. The Clause protects India and other developing countries from breaching the 10 per cent threshold of trade-distorting subsidies due to their public stockholding programmes under WTO's Agreement on Agriculture.

WALKING THE TIGHTROPE

Countries threaten to withdraw 'Peace Clause' for food security under the Bali Package

Members say trade facilitation agreement was part of the Bali Package, so unravelling one aspect will lead to the collapse of others

'Peace Clause' gives India and other developing countries immunity from legal challenges in running public food stockholding programmes

The clause also allows India to provide trade-distorting subsidies under its public stockholding programme till a permanent solution is reached under WTO's Agreement on Agriculture

Despite threats, India remains firm on its stand of linking the trade pact with food security concerns


The Business Standard, 28 July, 2014, http://www.business-standard.com/article/economy-policy/wto-standoff-india-may-lose-peace-clause-if-bali-pack-fails-114072800063_1.html


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