Its Food Stock Subsidies to “Make or Break” Bali Trade

Arun Goyal

WTO Bali Ministerial Meet - 5 December afternoon, 13:30 hrs

Commerce Minister Anand Sharma maintained his combative stance at a jam packed press conference with more than 300 persons in the huge Pecatu Hall of the Bali Nusa Dua Convention Centre where the WTO meet is being held.

Sharma further said that the issue of subsidies for food security was on the table since the 2005 Hong Kong Ministerial. The Developed Countries did not respond to the issue raised by India.

Anand Sharma took the support of FAO Hunger and Food security documents and the UN Millennium Development Goal to say that food security for the poor is a “non negotiable” issue. He said that he would not “beg for a peace clause” from the Developed Countries. After adding the population of the countries behind him, he said that he has more than 75 percent of the world population with him on this issue of food security. (He seems to be counting south Africa, Indonesia and China in the crowd behind him)

USTR Mike Froman landed in Bali on 4^th December, Sharma said that he would respond to initiatives for a meeting from the super power but would not seek his help, It is said that a one-to-one meet between the two Agro super powers is on the anvil. Both are for agro subsidies, the difference is that Sharma is doing it for the poor consumers while US is subsidizing the poor farmers and the ‘poor consumers’ in other countries.

Conciliation, Mediation and Arbitration in the air

Despite the public stance, later on Wednesday India gave hints of a more conciliatory approach in a private meeting open to heads of delegations, indicating it would be open to continue discussing the subject in consultations.

He wanted a permanent waiver in the WTO rules on the issue of stockholding for food security, any interim measure smacked of compromise which is not acceptable to him.

India has however relented on the issue of rejecting the entire Bali pact if its demand on food security issue is not accepted. He said that Trade Facilitation in its present form is acceptable to him with minor modification. India agrees to eight out of ten issues outlined in the draft text for the Bali pact.

Sharma responded to a question on subsidized food security stocks entering world trade stating that this was not allowed in the Indian trade law. The stocks were meant only for the poor consumers. He thus seems to say that with this assurance, his demand can be accepted by the Bali meet.

Sharma also told the press meet that if the WTO is ready to update the calculations on subsidies based on current prices instead of the outmoded 1984-86 prices, he is willing to sign the Bali pact. The calculations by his economists seem to say that India is far below the cut off 10 percent subsidy iff this factor is introduced in the calculations of Aggregate measurement of Support (AMS)

A clear end date to peace clause must, says EU and China

Indonesia President has called the Prime Minister Manmohan Singh seeking his help for a successful outcome to the Bali meet. Sharma commented on this news report saying that Indonesia supported the Indian position on food security. Sharma noted, India is not alone in wanting a permanent solution on food stockholding. Sources confirm that some other developing countries have rallied around the idea, including South Africa.

“The US will not accept a permanent distortion of agricultural trade,” one delegate said.

During Wednesday afternoon’s informal meetings, the EU similarly stressed that while food security is a key topic, a clear end date for the proposed “peace clause” must be included in any final Bali text. Interim solutions,. China concurred that in four years – or some other time period acceptable to all – it should be possible to reach a permanent solution on the food stocks issue.

In the corridors, one developed country delegate indicated that it would be difficult to find landing zones after India’s firm declaration. Others suggested, however, that maybe negotiators just needed to “give it some more time.”

NGO Pressures

More than 75 NGOs from India are present at the venue. Swadesh Jagran Manch and other BJP oriented organization are pushing Sharma to stick to the no compromise on food security stance. On the other hand, NGOs like CUTS led by Pradeep Mehta want a successful outcome to the meet with a compromise on the food security issue. This is a reversal from his statement just a day ago when he extolled Anand Sharma and India to standing up to the pressures from the Developed Countries. It seems that the NGO are being used and misused by the WTO and trade super powers!

Trade facilitation, “balance” questions linger

In the meantime, officials say, other pressing Bali topics - such as the remaining issues in the trade facilitation draft text - appear to have been put on the back burner until the stalemate over food stockholding rules is resolved.

“It doesn’t make sense to struggle” on trade facilitation until the peace clause issue is worked out, one source said. “We probably will not see anything on that until we know the rest.”

Some members, such as Argentina, Cuba, and Bolivia, have also reportedly raised questions about the balance seen in the whole Bali package, particularly in the trade facilitation draft text.

A trade facilitation agreement is widely seen as the centre piece of the proposed Bali package, with high-level officials continuing their calls on Wednesday for WTO members to clinch a deal in Bali.

“A deal on trade facilitation should be a low-hanging fruit to benefit millions of people all around the world,” former UN Secretary- General and Chair of the Africa Progress Panel Kofi Annan said in a statement.

“I therefore urge all nations to make every effort to reach an agreement on the facilitation of trade at the meeting in Bali this week,” he added, stressing also that a Bali package is the “best hope” the world has for keeping global trade discussions alive.

Yemen is “open for business”

On a less sombre note, trade ministers took time Wednesday evening to formally welcome Yemen into their ranks, thirteen years after Sana’a submitted its initial request for accession.

Once Yemen ratifies its accession terms, it will become the organisation’s 160th member, along with being the seventh LDC to join the WTO since 1995. Eight other LDCs are currently negotiating to join the trade body.

Sources stressed that the withdrawal of Ukraine’s veto on Yemen’s terms for membership was key in enabling the latter to join the WTO.

“Yemen is open for business,” said the country’s trade minister, Sa’aduddin Bin Taleb, during the accession ceremony.

Yemen’s exports are primarily limited to two commodities: oil and gas. These products do not face market access difficulties of their own, according to Nagib Hamim, who serves as the economic attaché for WTO affairs at the Yemeni mission in Geneva. Rather, the real gains for Sana’a will be in benefitting from international trade rules and in being able to attract new investment.

Welcoming Yemen into the group, Nepal on behalf of the LDC Group and Egypt for the Arab Group both noted that joining the WTO needs to become a less difficult process for the world’s poorest countries.

Other LDCs echoed that sentiment during today’s ceremony, citing frequent and often “maverick” demands from some of their trading partners during their accession bids.

The WTO’s guidelines for facilitating the accession of poorer countries were revised last year, following up on a decision made at the 2011 ministerial in Geneva. The revised LDC guidelines include, for instance, market access benchmarks on goods, along with provisions on transparency, special and differential treatment, and technical assistance.