There has been a lot of furore about how the Indian government in general and Narendra Modi in particular has blocked a crucial trade deal and how our current "nationalist government" has played spoilsport to an international treaty that would increase global cooperation and create a new framework for a unified trade consortium. On the other hand, I also read about a few small voices that supported India's stand. As an educated Indian and a concerned citizen, I wanted to find out more.
In this post, I intend to set forth before my readers the essentials of this controversy in understandable terms and why we need to take into consideration what the Indian government is saying seriously and why it cannot be relegated as mere bull-headedness. This post is as much of a revelation for me as for you. The deeper I went into the clauses of each agreement and the history of the WTO, the more there was to unearth. I'm no Amartya Sen, but I can read and understand English. So I tried to get to the root of the whole issue. Here goes my take on the whole mess. What does the WTO controversy consist of?
- The WTO Trade Facilitation Agreement which India is not willing to ratify UNTIL
- The WTO Agreement on Agriculture terms which it seeks are agreed upon.
In order to better understand the situation, we must understand the relevant sections of both (the WTO Trade Facilitation Agreement, hereafter referred to as TFA and the WTO Agreement on Agriculture, hereafter referred to as AoA).
The WTO TFA was discussed in December 2013 at the 9th ministerial conference of the WTO held in Bali. The ministerial conference is the apex decision-making body/platform within the WTO and since 1996, there have been 9 of these (once every two years). 159 member countries of the WTO agreed to (in principle) take a better look at the specifics of the trade facilitation agreement which (if ratified) would mean -
- Expediting movement, release and clearance of goods (including those in transit) from one country to another.
- Increase cooperation amongst members (classified into economic status from developed to least-developed)
- Recognise the needs of aforementioned "developing and least-developed" economies and facilitate help from the developed nations to the latter category (termed in the ministerial decision document published on the WTO website as "enhance assistance and support capacity-building endeavours").
The WTO AoA was also discussed in the same conference and entails -
- Member countries making a commitment of reduced domestic support
- Any such domestic support to be in the "green box" category.
Here's all the relevant documentation.
- The Bali Package Summary - https://dl.dropboxusercontent.com/u/7129797/WTO%20TFA%20Mess/The%20Bali%20Package%20-%20Summary.pdf
- The details of the trade facilitation agreement - https://dl.dropboxusercontent.com/u/7129797/WTO%20TFA%20Mess/Draft%20Ministerial%20Decision-TFA-Bali.pdf
- The details of the food stockholding decisions - https://dl.dropboxusercontent.com/u/7129797/WTO%20TFA%20Mess/Draft%20Ministerial%20Decision-TFA%20%28Stockholding%29-Bali.pdf
- Definition of domestic support - http://www.wto.org/english/tratop_e/agric_e/ag_intro03_domestic_e.htm
What does this all mean? Essentially, to explain in layman's terms, the TFA is a treaty that seeks to ease customs and other regulations and facilitate the movement of goods from one country to another. However, it involves certain commitments that member countries HAVE to make. All member countries HAVE to abide by certain reporting norms (articles 1-3), HAVE to upgrade their technologies in order to fully do that (article 8.1) and HAVE to ensure that they follow certain standardized practices in case of legal disputes. All straight so far. However, at this conference in Bali; there was also a discussion on trade regulations relating to agricultural products (which falls under the AoA). The AoA states that though the ministerial body recognizes the need for member countries (particularly developing and least-developed) to promote domestic support (through various measures which we shall come to in a bit), said measures should not "disrupt" international trade. The ministerial body has then classified activities which any government can undertake into boxes. Activities like agricultural research or training to producers (farmers) are "green box" activities while activities like buying food-grain or equivalent produce at a guaranteed price are "amber box" measures. In language that you and I can understand, AoA seeks to limit the manner in which governments can intervene to help their producers (in our case; farmers). If we want to comply with the AoA, we need to reduce domestic support or ensure that said domestic support is of a non-disruptive (to international trade) nature.
The TFA is a crucial deal for developed countries. It shall ensure that developing and least-developed countries HAVE to comply to certain standards and to certain reporting regulations. It shall save everybody (mostly developed nations) money to the tune of USD 1 trillion (as per an article on india.com) However, the TFA only talks about best-effort activities that the developed countries MAY or MAY NOT take to help enhance supply in developing and least-developed countries and to assist in capacity-building measures. If you check the actual verbiage, it is cleverly worded as "member countries are encouraged to share best practices . . . ". There's no obligation through.
Since both discussions (the TFA and the AoA) happened in parallel, we saw this as a golden opportunity for negotiation. What the Indian government wants is to ease the regulations on the AoA. It wants to increase domestic support to ensure that it helps farmers grow more produce. It wants to buy that produce at guaranteed prices to give the farmer a better deal. It wants to ensure that its vast poor population is fed through subsidized produce. Just before the recently concluded elections, the Congress government (misguided and moronic though it was) pushed through the food security bill which entails enormous trade-disruptive practices that the government MUST adopt if it wants to bring this bill to fruition. At the 9th Bali conference, we negotiated hard. We wanted to ease regulations in the AoA if developed countries wanted to have their cake and eat it too in the form of the TFA.
As soon as India took this stand, the western media must have swung into action. Through it's tentacle-like reach and its mass user base, it spread the word. India was the cause of the TFA to fail. India reneged on its original promise. India is to blame. Check out the sample headlines and you'll see why I call it either an orchestrated attempt of the media to spread misinformation or sheer laziness to do basic research. The headlines painted a very bad picture of the Indian government.
- Deutsche Welle - What will India's veto of WTO deal cost global trade?
- Reuters - Disappointment, uncertainty after India blocks WTO trade deal
- Wall Street Journal - Modi is acting like an economic nationalist by blocking the WTO agreement
I expected the Indian media to swing into action and defend the government. After all, here is a government that is trying to ACTUALLY help the poor. A government is trying to bring to light a scatter-brained idea of the Congress which they (the Congress) never hoped to implement successfully and is going all-out and taking a stand for its own people. At the center of this controversy is of course Modi. The man is a leader. He's the champion for the underdog here. It's a sure-fire winner of a story for the media. But the media failed. It stuck to the tone that the western hemisphere was taking. Maybe it did not understand the issue. Maybe there's money involved in mainstream media houses and we can't afford to antagonise the big guns. Maybe the Indian media was just plain scared. Whatever the reason, our own people did not support Modi. When they should have.
There's a lesson in here for us. For you and me. That information can be represented anyway we want. but to sift through all the information that is available to us, we need to take effort. We need to rationally think our way through misleading words and evaluate facts. More importantly, we need to take a stand after evaluating those facts. A moral stand. In this case, the stand that India's poor need to be fed, need to be supported. The small and marginal farmers in India need to be given economic assistance by assuring them a minimum support price.
I don't know whether our media will bring to the general public this side of the story. I don't know whether our media houses will decide that journalistic integrity also means taking a moral stand for the sake of the nation and bringing to the public attention the courage that it took for Modi to take this stand on an international forum so soon after taking charge of the country's affairs. I also don't know the global ramifications of this stand and why our media is not supporting our own government. But I do know that in this day and age of information, I shall be doing my little bit by spreading this word. I do know that a government's first and foremost duty is towards it's citizens.
I do know that if by supporting such a stand, I am labelled a "nationalist" (as the media is so self-righteously labelling Modi and the government), so be it.