Tough Indian Stance Taking Global Trade Pact Down to The Wire

Efforts to assuage Indian concerns about a landmark global trade pact appear to have failed, sources involved in the discussions said on Monday, setting off a frantic rush to win its support before a Thursday deadline.

India is the most prominent of a group of developing nations angry with rich countries for failing to address their concerns about a deal on trade facilitation struck by WTO member states in Bali, Indonesia, last year.

Proponents believe the deal could add $1 trillion to global gross domestic product and 21 million jobs by slashing red tape and streamlining customs, eliminating delays at the border that can often cost more than tariffs themselves.

A failure could prove disastrous for the moribund World Trade Organization (WTO) and the system of global free trade deals it underpins.

As late as Sunday, hopes were high that publicly addressing Indian concerns during a G20 Trade Ministers meeting in Sydney this past weekend would give it a face-saving path towards reaffirming its assent before the July 31 deadline.

India stockpiles food for its poor, citing the need for food security, but doing so puts it at risk of breaking the rules of the WTO which worries that the stockpiling of subsidised food can distort trade.

In Bali, WTO members agreed to give India a pass on its stockpiles until 2017, while negotiating a permanent solution.

Officials told Reuters that India had not supplied any clear indication of concessions it wanted, so attempts were made at the meeting to reassure it that its concerns, whatever they may be, were being heard.

"India clearly and forcefully expressed its concern that work proceed on all fronts, including food stockpiling, and received assurances that all G20 members are committed to the full implementation of all Bali agreements on the agreed timetables," US Trade Representative Michael Froman told Reuters on Monday.

'MAIN CONCERN'

A confidential "Summary of Discussion" circulated to G20 participants by Australian Trade Minister Andrew Robb obtained by Reuters details what one official said was an example of India winning acknowledgment of its concerns.

The document notes that specific Indian concerns about the deal were raised by the members and pledges to work constructively this week to address those issues.

In principle, the WTO could pass the agreement on the basis of a qualified majority, but experts say that would be unprecedented and virtually impossible in an organisation that operates on consensus.

"India is quite influential, so let's hope that they're going to back down in some way," Peter Gallagher, an expert on free trade and the WTO at the University of Adelaide, told Reuters.

But despite reassurances it received at the meeting and in public afterwards, Indian officials again said on Sunday they had not been convinced.

"The way things are moving, there is no way we can agree to the trade facilitation agreement being pushed by the developed nations at WTO within the prescribed deadline. Food security has always been India's main concern and this time we are not going to concede," an Indian official told Business Standard.

One official involved in the negotiations, speaking under the condition of anonymity to speak frankly, said the statement was emblematic of "erratic" Indian behaviour over the deal and cast doubt on its trustworthiness as a negotiating partner.

The row over subsidies has raised fears that the so-called trade facilitation agreement, the first ever global trade agreement under the WTO, will be derailed.

A deal was only reached after New Delhi extracted promises that its concerns related to food subsidies would be addressed and Gallagher said it was unclear why those concerns were resurfacing now when they are unrelated to trade facilitation.

Copyright: Thomson Reuters 2014