India has come under heavy criticism for blocking the implementation of a World Trade Organisation (WTO) agreement reached at Bali in December 2013.
Proponents celebrated the Bali “package” as a long-awaited achievement by the WTO, which had failed to reach a significant agreement since 1995. However, critics lamented that the Bali deal was skewed in the favour of developed nations.
The final package included a Trade Facilitation Agreement (TFA), which aimed to simplify logistics and customs, as well as parallel proposals for food security and agriculture which were important for developing countries. The TFA was controversial because it required developing countries to invest in sophisticated customs technology regardless of their level of development.
It is now uncertain whether the Bali deal will actually be ratified, after India blocked the implementation of the TFA in July 2014, citing that there had not been enough progress on food security and agriculture issues.
India’s food security concerns
In Bali, India and 33 other developing countries wanted to amend the existing Agreement on Agriculture. The aim was to protect their ability to continue food security programs. Through these programs governments buy food from farmers at above market rates in order to stockpile staples like wheat and rice for distribution at subsidised prices for their poorest citizens.
The existing rules meant that countries implementing these essential food security programs could face legal challenges if they went above the tight limit set by the WTO. In the absence of a permanent solution, an agreement was reached in Bali to implement a temporary “peace clause” which would protect these countries from legal challenges.
The double standards of the WTO
This meant that while developed countries will benefit disproportionately from the customs reforms required by the Bali agreement, developing countries did not gain a permanent solution to one of their major concerns. Developing countries will also face much higher costs in implementing the high-tech customs reforms, when many are already struggling to provide adequate health and education services.
The Indian ambassador to the WTO was recently quoted as criticising the implementation process of the Bali deal, which he said had not met developing countries needs and had been “heavily skewed in favour of trade facilitation”.
India has come under heavy criticism for undermining the future of the WTO. Yet India’s blocking of the Bali agreement is based on a perception that its needs and the needs of other developing countries are again seen as secondary to the needs of the more powerful wealthier nations.
In reality, it is the failure of the WTO to deliver meaningful outcomes for developing countries which is the real obstacle to a functioning multilateral trade system.
Photos: Jemma Williams