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WTO favours protecting markets over providing subsidised food to poor

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  • karmayog - tanya
    http://www.dnaindia.com/analysis/1900793/column-how-to-win-the-fight-in-an-unfair-international-market How to win the fight in an unfair international market
    Message 1 of 1 , Oct 9, 2013
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      How to win the fight in an unfair international market

      Wednesday, Oct 9, 2013, 8:45 IST | Agency: DNA

      Pranjal Sharma

      The once influential global institution World Trade Organization (WTO)
      continues to be afflicted with the same problems that diminished its clout.

      The recent wrangling on trade facilitation and food security bill is another
      example of how WTO continues to focus on the interests of the developed and
      not the developing world. It also shows how developing countries like India
      have not been able to make the most of WTO global trading rules.

      But let's begin by talking about WTO's skewed understanding of fairness.
      Visiting WTO Director General Roberto Azevedo says that India's food
      security law will violates its rules. Under WTO rules countries must limit
      the supply of subsidized food to 10 per cent of total output. But with India
      planning to provide 70 per cent of the population subsided grains, it will
      be in breach of this condition.

      Not just India, several other developing countries including a Group of 33
      has been asking WTO to relax this condition. For many poor countries,
      subsidized food supply is an important part of their welfare programmes. WTO
      has been unwilling to consider this view since global producers will be
      affected by the supply of subsidised food in emerging markets. The big
      producers of food like US, Western Europe and Australia have been hoping to
      provide agriculture and food products to developing markets where the demand
      is rising. They fear that the increase in domestic production coupled with
      subsidy on supply will push their products out of the market.

      In retaliation to WTO, developing countries led by India have been refusing
      to discuss improvements in trade facilitation. WTO has been negotiating an
      easier and less cumbersome regime of trade facilitation that speeds up the
      movement of goods across the world. WTO estimates that less bureaucratic
      hurdles will reduce time of processing and increase speed of delivery. This
      efficiency will add about a $1 trillion to global trade. In a time of
      downturn, this is seen as a significant boost to global economy.

      The standoff between the developed and developing world shows that not much
      has changed in the world. A similar standoff that began a decade ago in the
      Cancun Ministerial meeting led to a decline in the status of WTO. Developed
      countries had been using WTO to make trade rules to suit themselves at the
      expense of developing countries. Emerging markets dug in their heels on
      matters like the huge subsidy given by Western European countries to their
      farmers. It was estimated that the farm sector received subsidies of over a
      $1 billion per day.

      In some ways the wheel has come a full circle. The same countries are upset
      with India's subsidized supply of food to its own citizens. Europeans on the
      other hand were exporting their subsidized farm products.

      Blocking talks on trade facilitation to counter pressure on food subsidy has
      brought some concessions from WTO. Now WTO is willing to allow the subsidy
      to continue to 2-3 years while India is demanding about 9 years.

      It will take lot of tough negotiations before India and the Group of 33 can
      reach an acceptable agreement with WTO before a ministerial meeting in Bali
      in December this year.

      While emerging markets have learnt how to stall unfair rules being pushed by
      WTO, they have not yet learnt how to make the most of the fair rules.

      Internal efficiency and competitiveness is essential for developing
      countries to take on the developed world. India has fought many years for
      higher market access for its agricultural products in Western markets. But
      its internal food policy has prevented Indian products from achieving high
      quality and quantity that is good enough to be competitive in domestic and
      global markets. Similarly, India must reduce its internal red tape and
      inefficiencies that hurt exporters.
      Only then will it be able to take advantage of an improved global trade
      facilitation regime. Efficient internal policies are the best weapon against
      an unfair external market.

      The author tracks India's political economy and its engagement with the
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