India is in danger of becoming a new pariah state for its torpedoing of the World Trade Organisation’s first successful multilateral trade negotiation in 20 years.
The refusal to ratify the Bali pact – which India supported along with all other 159 WTO members last December – has been condemned by rich and poor countries alike since the veto prevented it from being implemented on July 31.
The Bali agreement was a breakthrough in “trade facilitation” – measures that aimed to make it easier for goods to cross borders, thus reducing the costs of trade and, in the case of perishables, avoiding waste through delays in shipments.
A number of individual governments, as well as the WTO and the World Bank and International Monetary Fund, are spending around $US300 million to implement trade facilitation projects around the developing world. This includes modernisation of ports in places like Africa, replacing bad roads and cutting red tape (and corruption) in customs bottlenecks.
It’s been estimated such reforms have the potential to add 1% to global GDP over the next five years or about $US1 trillion.
India itself was given a “four-year” peace clause to phase out its food subsidies, which are in breach of 20-year WTO rules. The subsidies allow make above market-price payments to Indian farmers while adding to food stockpiles intended for the poor but mostly go to waste.
Geneva trade officials say India has never fulfilled its obligation to report on the cost of these subsidies. India also imposes export controls on some food commodities, often distorting world prices in the process.
The Australian-led B20, which is advising the Group of 20 world’s leading economies on business initiatives this year, has urged member countries not to give up on the Bali trade package.
B20 Australia chairman Richard Goyder – who is head of Wesfarmers – says the business grouping is “extremely” disappointed in the Indian move and has pledged to continue to push the case for trade facilitation.
“We think there are significant benefits to all countries, particularly developing economies, in freeing up trade facilitation as agreed in Bali,” he says.
“We think it’s disappointing and we would encourage everyone to see if they can get this to happen. It’s important on these trade things to get everyone in because everyone will benefit.”
Australia is chairing the G20 this year. It will meet in Brisbane in October.
Nevil Gibson is Editor-in-Chief of the National Business Review based in Auckland. The above article, which appeared under his ‘Editor’s Insight,’ has been reproduced here with his permission. Another version of this article was first published at NBR Online.
