Trade-Offs

India’s weakening stance after two decades in the WTO

01 February 2016
India’s farmers have long opposed pressure from the WTO for the country to abandon its agricultural subsidies. Agriculture was brought under the purview of the global trading system with the Uruguay round of the GATT, which closed in 1994.
indranil mukherjee / afp / getty images
India’s farmers have long opposed pressure from the WTO for the country to abandon its agricultural subsidies. Agriculture was brought under the purview of the global trading system with the Uruguay round of the GATT, which closed in 1994.
indranil mukherjee / afp / getty images

On 15 December 2015, representatives of the 164 member states of the World Trade Organisation gathered in Nairobi for a ministerial conference—a biennial gathering, and the group’s highest decision-making forum. This was the tenth such meeting in the history of the organisation, which was founded in 1995 to arbitrate in matters of international commerce and to progressively lower trade barriers—such as import tariffs and domestic subsidies—in pursuit of an open global market. Writing in the Financial Times before the conference, Michael Froman, the United States’ top representative on trade policy, expressed his conviction that the meeting would “mark the end of an era.” It was time, he argued, “for the world to free itself of the strictures of Doha.”

Froman was referring to the Doha Development Agenda, the WTO’s current round of trade negotiations, which commenced in 2001 and is yet to be concluded. The Doha round aims at major reform of the international trading system through lowering barriers and revising trade rules, and also, as the round was originally pitched, at improving the trading prospects of developing countries—which form a majority of the WTO’s members, and argue that the current global trading regime is tilted steeply against them. The Doha round has had a mixed record on that latter goal, but, particularly in giving developing countries more room for manoeuvre in negotiations and pushing developed countries to acknowledge their protectionist policies, it has given developing countries hope. But, developing countries complain, it has also forced them to compromise on domestic interests in areas including agriculture, services and intellectual property regulation, to the benefit of their developed counterparts.

Negotiations of the Doha round have been fraught from the start. For India, a consistently contentious point has been opposition from developed countries to its agricultural and food subsidies, which, according to figures it submitted to the WTO in 2014, amounted to about $51 billion in the 2010 financial year. According to the Organisation for Economic Cooperation and Development, a coalition of primarily developed countries, the United States paid over $95 billion in agricultural subsidies in 2014, and the European Union over $125 billion that same year, to comparatively richer and smaller agricultural populations. Matters came to a head at the WTO’s ninth ministerial conference, in Bali in late 2013, after developed countries challenged India’s practice of buying grain at guaranteed minimum prices to maintain public stockpiles of food, and also other provisions of its National Food Security Act. To allow talks on other issues to move forward, India assented to a temporary clause which allowed it to continue its subsidies, and which promised that a permanent agreement on the issue would be negotiated in the near future. That was no real victory, since it committed India to not expanding its agricultural subsidies in the interim, and did not rule out legal action against it on charges of distorting trade.

Urvashi Sarkar is an independent journalist based in Delhi and Mumbai.

Keywords: World trade organisation India weakening stance
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