By Eric Bellman and Peter Kenny
GENEVA--India effectively blocked an international agreement on easing trade regulations last week, saying the effort to promote global trade should be linked to food security.
At a meeting of the World Trade Organization in Geneva on Friday, India said it wouldn't support a "trade facilitation" agreement reached in the Indonesian resort city of Bali in December without a parallel agreement allowing developing countries more freedom to subsidize and stockpile food.
India's decision--which had support from Bolivia, Cuba and Venezuela but few others--raises concerns that the WTO's 160 members won't be able to reach the consensus needed for the Bali agreement--aimed at streamlining and harmonizing customs practices--to take effect.
If no consensus is reached by July 31, the WTO's general council meeting will be adjourned, said Keith Rockwell, a spokesman for the trade body.
India is hoping the deadline for the approval of the Bali agreement can be extended. However, some trade negotiators from other countries warned that the important agreement--which some economists estimated could save WTO members more than a trillion dollars eventually--may just die if this week's deadline isn't met.
India's actions prompted criticism from WTO members, some of whom said that India's brinkmanship could undermine the international trading system as the country has basically hijacked the trade talks to force a change on one issue.
A joint statement from more than 20 WTO members--including developing countries such as Thailand and developed countries including Canada--urged members to pass whatthey had agreed to in Bali.
"A decision to step away would be in no one's interest," the statement Friday said. "It would seriously undermine the ability of the WTO to deliver for the future."
During the Friday meeting in Geneva, India said the WTO wasn't taking its demands seriously, so discussions on how to implement everything agreed to in Bali should be extended until the end of the year.
"This is important so that the millions of farmers and the poor families who depend on domestic food stocks do not have to live in constant fear, " Anjali Prasad, India's ambassador to the WTO said in a statement during the meeting, according to an Indian trade ministry release. "My delegation is of the view that the adoption of the (trade facilitation) protocol be postponed till a permanent solution on public stockholding for food security is found."
The Bali agreement was supposed to be a package of the "low-hanging-fruit" policies to which every country could easily agree.
It was an attempt to jump-start the long-stalled Doha round of WTO talks that began in 2001 in the Qatari capital. The Doha round was an ambitious plan to open up more sectors of the global economy to more trade. But it has been stuck because the WTO depends on consensus for decisions and countries can't agree on many of the controversial changes sought.
Indian trade officials said the South Asian nation was basically on board with the trade-facilitation measures, but it needed the WTO to go further and start to recognize some of the unique issues in India and other developing countries.
India's problem relates to WTO rules on food stockpiling and subsidizing. The WTO has a formula that defines how much money a country can spend creating a food stockpile for security and support for farmers. India wants the rules changed to allow it to go beyond the limits.
India has hundreds of millions of farmers and consumers who are on or just above the poverty line, and Indian officials say the country needs more freedom to help its citizens.
During the Bali discussions, India agreed to the trade-facilitation package with the understanding that the WTO members would find some sort of permanent way to address India's demands. While India originally agreed to give the WTO four years to find a permanent solution, it now looks like the country wants the solution before it will approve the trade facilitation package.
Rajesh Roy contributed to this article.
Write to Eric Bellman at email@example.com
(END) Dow Jones Newswires
July 27, 2014 10:43 ET (14:43 GMT)
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