India's demands block $1 trillion

WTO deal on customs rules

A labourer speaks on a mobile phone while lying on sacks filled with rice at the Agricultural Produce
arket !ommittee "AP!# market yard$ on the outskirts of Ahmedabad %uly &'$ &(1)*
BY DAVID BRUNNSTROM AND TOM MILES-
GENEVA Fri Aug 1, 2014
"+euters# , The World Trade Organi-ation failed on Thursday to reach a deal to
standardise customs rules$ which would ha.e been the first global trade reform in two
decades but was blocked by India's demands for concessions on agricultural
stockpiling*
/We ha.e not been able to find a solution that would allow us to bridge that gap$/ WTO
0irector,1eneral +oberto A-e.edo told trade diplomats in 1ene.a 2ust two hours
before the final deadline for a deal*"+euters# , The World Trade Organi-ation failed on
Thursday to reach a deal to standardise customs rules$ which would ha.e been the first
global trade reform in two decades but was blocked by India's demands for
concessions on agricultural stockpiling*
/Of course it is true that e.erything remains in play until midnight$ but at present there
is no workable solution on the table$ and I ha.e no indication that one will be
forthcoming*/
The deadline passed without a breakthrough* WTO ministers had already agreed the
global reform of customs procedures known as /trade facilitation/ last 0ecember$ but
it needed to be put into the WTO rule book by %uly 31*
ost diplomats saw that as rubber,stamping a uni4ue success in the WTO's 1' year
history$ which according to some estimates would add $1 trillion and &1 million 2obs to
the world economy$ so they were shocked when India un.eiled its .eto*
Trade e5perts say Thursday's failure is likely to end the era of trying to cobble together
global trade agreements and to accelerate efforts by smaller groups of like,minded
nations to liberalise trade among themsel.es* India has been .ocal in opposing such
mo.es$ making its .eto e.en more surprising*
/Today6s de.elopments suggest that there is little hope for truly global trade talks to
take place$/ said %ake !ol.in at the 7ational 8oreign Trade !ouncil$ a leading 9*:*
business group*
/The .ast ma2ority of countries who understand the importance of moderni-ing trade
rules and keeping their promises will ha.e to pick up the pieces and figure out how to
mo.e forward*/
:ome nations ha.e already discussed a plan to e5clude India from the agreement and
push ahead regardless$ and the International !hamber of !ommerce urged officials to
/make it happen*/
Our message is clear* 1et back to the table$ sa.e this deal and get the multilateral
trade agenda back on the road to completion sooner rather than later$; I!! :ecretary
1eneral %ohn 0anilo.ich said*
9*:* :ecretary of :tate %ohn <erry$ on a .isit to 7ew 0elhi$ had earlier said he was
hopeful that differences between India and much of the rest of the world could be
resol.ed*
=ut after A-e.edo's speech$ 9*:* Ambassador to the WTO ichael Punke was
downbeat
/We're ob.iously sad and disappointed that a .ery small handful of countries were
unwilling to keep their commitments from the 0ecember conference in =ali$ and we
agree with the 0irector,1eneral that that action has put this institution on .ery
uncertain new ground$/ Punke told reporters*
India had insisted that$ in e5change for signing the trade facilitation agreement$ it
must see more progress on a parallel pact gi.ing it more freedom to subsidise and
stockpile food grains than is allowed by WTO rules* It got support from !uba$
>ene-uela and =oli.ia*
India's new nationalist go.ernment has insisted that a permanent agreement on its
subsidised food stockpiling must be in place at the same time as the trade facilitation
deal$ well ahead of a &(1? target set last 0ecember in =ali*
<erry$ whose .isit to India was aimed at re.italising bilateral ties but was
o.ershadowed by the standoff$ said the 9nited :tates understood India's position that
it needs to pro.ide food security for its poor but India would lose out if it refused to
maintained its .eto*
0@AA WITBO9T I70IAC
0iplomats say India could technically attract a trade dispute if it caused the deal to
collapse$ although nobody wanted to threaten legal action at this stage* The summer
break will gi.e diplomats time to mull options$ including mo.ing ahead without India*
Technical details would still ha.e to be ironed out$ but there was a /credible core
group/ that would be ready to start talking about a such a deal in :eptember$ a source
in.ol.ed in the discussions said*
/What began as a murmur has become a much more acti.e discussion in 1ene.a and I
think that there are a lot of members in town right now that ha.e reached the reluctant
conclusion that that may be the only way to go$/ he said*
An Australian trade official with knowledge of the talks said a group of countries
including the 9nited :tates$ @uropean 9nion$ Australia$ %apan$ !anada and 7orway
began discussing the possibility in 1ene.a on Wednesday afternoon*
7ew 0elhi cannot be deliberately e5cluded$ since that would mean other countries
slowing down containers destined for India$ but if it becomes a /free,rider/ it will add
another nail in the coffin of attempts to hammer out global trade reform*
Trade diplomats had pre.iously said they were reluctant to consider the idea of the all,
but,India option$ but momentum behind the trade facilitation pace means it may be
hard to stop*
any countries$ including !hina and =ra-il$ ha.e already notified the WTO of steps
they plan to take to implement the customs accord immediately*
Other nations ha.e begun bringing the rules into domestic law$ and the WTO has set
up a funding mechanism to assist* =ut WTO head A-e.edo said he feared that while
ma2or economies had options open to them$ the poorest would be left behind*
/If the system fails to function properly then the smallest nations will be the biggest
losers$/ he said* /It would be a tragic outcome for those economies D and therefore a
tragic outcome for us all*/
"Additional reporting by +a2esh <umar :ingh$ ano2 <umar and <rista ahr in 7ew
0elhi$ att :iegel in :ydney and <rista Bughes in Washington 0!E Writing by :an2ee.
iglaniE @diting by ike !ollett,White and 1rant c!ool#
Posted by Tha.am