India Blocks WTO Deal on Customs Rules, Angering Fellow Members

At the meeting in Geneva, diplomats from the 160 WTO member countries were supposed to rubber stamp a deal on "trade facilitation" that was agreed at talks in Bali last December. Some estimates say it could add $1 trillion (Rs.s 60 lakh crore) to the world economy and create 21 million jobs.

India wants implementation of the Trade Facilitation Agreement or TFA as a part of a single undertaking that includes a permanent solution on public food stockpile, necessary for its food security programme.

India stockpiles food for its poor, citing the need for food security, but doing so puts it at risk of breaking rules of the WTO, which worries that the stockpiling of subsidised food can distort trade.

The current WTO norms limit the value of food subsidies at 10 per cent of the total value of food grain production of a country. So the US gives about $120 billion (Rs 7.2 lakh crore) as agriculture subsidy as compared to India's $12 billion (Rs 72,000 crore).

The subsidy support is calculated at prices that are over two decades old, not at current prices. India is asking for a change in the base year (1986) for calculating food subsidies.

In Bali, WTO members had agreed to give India a pass on its stockpiles until 2017, while negotiating a permanent solution. India links its signing the TFA - which has a deadline of July 31 - to having a concrete roadmap on that permanent solution.  

A group of 25 countries including Australia, Canada, Colombia, Mexico, Norway, Switzerland and Thailand said they were "dismayed" at the failure to agree on the TFA at Thursday's meeting. "A decision to step away would be in no one's interest. It would seriously undermine the ability of the WTO to deliver for the future," the group said in a statement. The EU issued a similar warning.

WTO Director General Roberto Azevedo said talks were ongoing to try to resolve the problem before the deadline of July 31. "We are informally talking, yes," he told Reuters. When asked what would happen if there were no deal by July 31, he said: "That's part of the conversation."

The TFA, which has to be formally implemented in 2015, aims at simplifying customs procedure, increasing transparency and reducing transactions cost. It is being pushed by the US and other developed nations as they seek to bolster their sagging economies through unhindered international trade by way of uniform and easy procedures at customs.

Experts say if the global trade negotiations lose momentum again, many WTO members, including the European Union and the United States, will effectively give up and focus all their efforts on more ambitious trade reforms that they are already negotiating bilaterally and in small groups.