DW

What will India's veto of WTO deal cost global trade?It was designed to reduce trade barriers and boost GDP growth. But India's decision to veto the WTO Trade Facilitation Agreement may have significant consequences for the global economy, economist Rajiv Biswas tells DW.

4/8/2014

After refusing to sign the trade facilitation agreement (TFA) by July 31, Indian senior officials recently reiterated their willingness to sign the global deal if other World Trade Organization (WTO) members would agree to its parallel demand for concessions on stockpiling food. It was not immediately clear if the comments made in New Delhi would resurrect negotiations, but the officials said the deal could be signed as early as September.

New Delhi has insisted that, in exchange for signing the TFA, more progress on a parallel pact is needed. However, the pact would give the Indian government more freedom to subsidize and stockpile food grains than is allowed by World Trade Organization (WTO) rules. In Geneva, a trade diplomat from a developing nation was quoted by Reuters as saying: "The trust that countries have in what India says is going to be significantly diminished."

Rajiv Biswas, Asia-Pacific Chief Economist at the analytics firm IHS, says in a DW interview that the failure to reach the agreement would have a significant economic impact as the TFA is expected to boost world GDP by up to 1 trillion USD. At the same time, he says India is struggling to keep a balance between domestic political obligations and its international commitments under the WTO.

DW: What impact is India's refusal to ratify the TFA likely to have on the world economy?

Rajiv Biswas: The decision by India to veto a WTO Trade Facilitation Agreement on July 31st potentially has significant consequences for the global economy and Asian economies if a deal cannot be reached soon.

Biswas says the "TFA would give a boost to world GDP estimated to be up to 1 trillion USD"

If the TFA cannot be finalized, this means that the process of trade facilitation will need to be pursued at a regional or bilateral level by groups of countries, rather than implementing a global solution. But many countries could be left out of such regional or bilateral solutions, particularly many low income developing countries which are not part of major trade groupings or too small to be a priority partner for bilateral trade agreements.

Why does the WTO regard India's food subsidy policies as problematic?

India's food subsidy cost is already approaching 10 percent of the value of production, the cap set by existing WTO rules, but only because the value of the subsidy is calculated under a WTO formula set in the Uruguay Round of the General Agreement on Tariffs and Trade (GATT). The formula uses 1986-88 reference prices to calculate the subsidy. India is arguing for resetting the benchmark reference prices to allow for inflation.

These complications over the way the WTO calculates food subsidies have become especially problematic for India since the introduction of India's new Food Security Act legislation passed in 2013, which will increase food subsidies. With India's rice and wheat subsidies already estimated to be close to 9 percent of production based on the WTO 1986-88 price benchmark, the newly elected Indian government led by PM Modi is concerned that it could soon be in breach of WTO food subsidy rules and incur large penalties.

What would be the advantages of the TFA for the world economy?

With total world trade in goods and commercial services now exceeding 23 trillion USD, the impact of such significant reductions in the costs of international trade would generate very large positive gains for world GDP. With the WTO having 160 member countries accounting for over 96 percent of world trade,

the TFA would give a boost to world GDP estimated to be in the range of 400 billion USD to 1 trillion USD, as well as create an estimated 21 million new jobs.

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Moreover, the deal would lead to an estimated reduction in total costs of trade of up to 13 percent to 15 percent for developing countries and up to ten percent for developed nations. The deal would create a global framework for more efficient customs documentation and administrative procedures for cross-border trade, which currently remains a significant cost factor for international shipments.

How beneficial would the TFA be for Asian countries, in particular?

For the Asia-Pacific Economic Co-operation group of countries, the TFA is estimated to increase GDP by up to 0.26 percent, and savings of around 1 percent to 2 percent of import costs for Asia-Pacific developing nations. Since the East Asian economies account for a large share of world commerce and trade accounts for a high share of the GDP of many Asian countries, they stand to benefit significantly from the TFA.

What compromise deal is India now proposing?

With the WTO now taking a summer recess, India is proposing that a compromise deal that addresses its food security concerns can still be negotiated in September, and finalized by the end of 2014, allowing time for the TFA to be implemented as scheduled in July 2015.

India is seeking either a parallel final deal on food subsidies or else a clear interim agreement that will guarantee no WTO penalties against Indian subsidies until a permanent food security deal is concluded, with an adjustment for inflation of the WTO benchmark reference prices for food subsidies.

Indian Prime Minister Narendra Modi will be making a state visit to the US in September for a summit with US President Barack Obama, and neither side will want this WTO spat to derail the important high level bilateral talks that will set the medium-term agenda for Indo-US relations. President Obama has described the US relationship with India as "one of the defining partnerships of the 21st century."

What impact is this trade spat likely to have on India's image as a trade partner?

India is struggling to keep a balance between domestic political obligations and its international commitments under the WTO. One of the country's major economic vulnerabilities is the high level of fiscal deficits. Subsidies for fuel and food are key contributors to India's fiscal problems.

"India is struggling to keep a balance between domestic political obligations and its international commitments under the WTO"

The Food Security Act was passed by the previous Congress-led government in 2013, and although Modi himself opposed the Food Security legislation, it is difficult for him to immediately withdraw it since it is popular among low-income households, with around 30 percent of India's population still living in extreme poverty.

While the Modi government is likely to take steps to reduce subsidies, no major changes were announced in his government's first federal budget announced in July. It seems that subsidy reductions will be done gradually.

If the Modi government can achieve stronger economic growth that translates into significant reductions in the share of India's population in poverty, then it will allow food subsidies to be reduced through more targeted food programs. Therefore the Modi government is facing a difficult balancing act to avoid WTO penalties while also preventing a domestic voter backlash over food subsidies.

How much time is there left to salvage the deal and reach a global trade agreement?

The economic stakes are high for trade negotiators to find a diplomatic compromise and conclude the WTO Trade Facilitation Agreement treaty before the end of 2014. The WTO Secretary-General Roberto Azedevo has called for member states to find a compromise when the negotiators return from their summer recess on September 1. India is hoping that negotiations can resume in September and a final Bali package deal can be agreed upon by December 2014.

Rajiv Biswas is Asia-Pacific Chief Economist at IHS, a global information and analytics firm. He is responsible for coordination of economic analyses and forecasts for the Asia-Pacific region.

Reuters

India says confident WTO will understand food security concernsBy Manoj Kumar

NEW DELHI Tue Aug 5, 2014 3:36pm IST

A labourer unloads sacks filled with rice at a wholesale grain market in Chandigarh July 29, 2014.

Credit: Reuters/Ajay Verma/Files

(Reuters) - India refused to yield ground on Tuesday on its spat with the World Trade Organisation and said it believed it could convince other members that its need for more freedom on food subsidies was legitimate.

Trade Minister Nirmala Sitharaman did not give details in a statement she made in parliament, but her comments offered a robust and uncompromising defence of the Indian position, suggesting the government planned to dig its heels in on an issue that has isolated New Delhi.

Indian Prime Minister Narendra Modi's new government vetoed the adoption of a treaty to simplify, standardise and streamline the rules for shipping goods across borders, having previously agreed to its terms at a ministerial conference on the Indonesian resort island of Bali last December.

Most diplomats had expected the pact to be rubber-stamped last week, marking a unique success in the WTO's 19-year history which, according to some estimates, would add $1 trillion and 21 million jobs to the world economy. India calls these estimates highly exaggerated.

It blocked the text because it wanted more attention paid to its concerns over WTO limits on stockpiling of food which will ultimately hit its subsidised food distribution programme, the world's largest, targeted at nearly 850 million people.

"I am confident that India will be able to persuade the WTO membership to appreciate the sensitivities of India and other developing countries and see their way to take this issue forward in a positive spirit," Sitharaman said amid thumping of desks by lawmakers.

After drawing widespread condemnation as the deadline for the deal lapsed on July 31, India has said it is ready to sign the global trade deal as early as next month if other WTO members agree to its demand for concessions on food subsidies, estimated at $12 billion a year.

India fears that once it agrees to trade facilitation - largely seen to help advanced nations - it would have lost the bargaining chip on the subsidy issue.

"India is not standing in way of implementation of Trade Facilitation but seeking equal level of commitment and progress in working on the issue of public stockholding," Sitharaman said.

"A permanent solution on food security is a must for us and we cannot wait endlessly in state of uncertainty while WTO engages in an academic debate on subject of food security," she said.

FATAL BLOW

But in vetoing the first worldwide trade reform measure in nearly two decades, India may have dealt a potentially fatal blow to the WTO's hopes of modernising the rules of global commerce and remaining the central forum for multilateral trade deals.

In the short term, this is a setback for freer commerce. In the longer run, it means trade liberalisation may advance - if at all - among narrower groups of countries, denying dissenters a chance to block progress, experts say.

While the unwieldy Geneva-based WTO will survive as a body for enforcing existing multilateral agreements, smaller clubs of like-minded nations are trying to move ahead faster to update the trade rules among themselves.

"Without a serious shakeup, the WTO's future looks like that of the League of Nations," said Simon Evenett, a professor at the Swiss Institute for International Economics. "Perhaps ultimately that's what some governments want."

But Sitharaman said India remained committed to the multilateral trading system. "We continue to believe that it (WTO) is in the best interest of developing countries, especially the poorest, most marginalised ones among them and we are determined to work to the strengthen the institution."

Trade ministry officials say the breakthrough may come once the WTO agrees to revise the base year for calculating food subsidies in line with current prices which will then bring India's subsidies within WTO's limits.

India is also ready to give an assurance that the foodgrains it procures from farmers at prices that are higher than the market price will not be dumped in the global market.

Finance Minister Arun Jaitley, a key member of Modi's team who had originally opposed the Bali accord, said India would not compromise on defending the interests of its farmers.

"Isolation doesn't matter," he told NDTV in an interview on Monday night. "Sometimes you can be the only one taking the right stand."

WSJ

India's Trade Minister Defends Decision to Block WTO Agreement

Trade Minister Expects the WTO to Understand India's View on Food Prices

By Eric Bellman connect Aug. 5, 2014 8:41 a.m. ET

Fish vendors wait for customers at Goubert market in Puducherry, India. Bloomberg News

NEW DELHI—India's new government Tuesday defended its actions in stopping a global trade deal and expressed confidence it would win international support for more latitude to subsidize and stockpile food.

Last week India withheld its approval of a World Trade Organization agreement designed to streamline customs procedures that some economists estimated would save the world economy more than $1 trillion.

India said it couldn't back the deal—which needed an unanimous endorsement by all WTO members to take effect—until developing countries are given more freedom to pay farmers above-market prices for food and then sell that food at below-market prices.

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"Developing countries such as India must have freedom to use food reserves to feed their poor without the threat of violating any international obligations," India Trade Minister Nirmala Sitharaman said in a speech before Parliament Tuesday. In addition she said countries need "to be able to guarantee some minimum returns to their poor farmers."

India's stance—which had few supporters even among developing nations—attracted a wave of criticism in the last week from diplomats, economists and executives that said it had spoiled a rare chance to improve the global trade system.

After a meeting Friday between U.S. Secretary of State John Kerry and India's new prime minister, Narendra Modi, a senior state department official said Mr. Kerry had told Mr. Modi he was disappointed by India's stance, which Mr. Kerry said "sends a confusing signal and undermines that very message that India is trying to send" that it is serious about reviving its economy.

Ms. Sitharaman defended India's decision, saying it wasn't ready to rush into a new trade agreement if its concerns weren't met. While the WTO had agreed to try to find a permanent solution to the food stockpiling issue in the next few years, India doesn't want to wait that long, she said.

"We cannot wait endlessly in a state of uncertainty while the WTO engages in an academic debate on the subject of food security," she said in one of her lengthiest public statements on the issue. "Issues of development and food security are critical to a vast swath of humanity and cannot be sacrificed to mercantilist considerations."

It is still unclear what happens next with the WTO and the trade facilitation agreement, which India's previous government agreed to on the Indonesian island of Bali in December. Ms. Sitharaman suggested she expects the struggling trade organization will come to understand its view.

"I am confident that India will be able to persuade the WTO membership to appreciate the sensitivities of India and other developing countries and see their way to taking this issue forward in a positive spirit," she said.

WSJ

Opinion Asia India vs. the World

Scuttling a WTO trade deal hurts the Modi government's attempt to project a reformist image to the world.

By Sadanand Dhume connect Updated Aug. 4, 2014 12:53 p.m. ET

If a country is known by the company it keeps, then India could scarcely have chosen worse during its showdown last week with the World Trade Organization in Geneva. The new Modi government's attempt to reopen negotiations on a global deal to simplify customs procedures agreed to by its predecessor last year found backing only from an axis of economic laggards: Cuba, Bolivia and Venezuela. Most others blamed New Delhi for failing to live up to its commitment to honor an agreement crafted largely at its behest to begin with.

At issue is a so-called trade facilitation agreement concurred to by the WTO's then 159 members in Bali last December. Under its terms, countries agreed to streamline and standardize customs procedures and improve infrastructure, which some economists say could add $1 trillion to the global economy and create 21 million jobs.

By refusing to sign the deal by the agreed-upon deadline of July 31, India may well have scuppered it for good, and raised questions over the future of the WTO itself. That this eleventh-hour brinkmanship came from the Modi administration, widely expected to be more outward-looking and reformist than its predecessor, adds shock to the expected dismay.

If Narendra Modi deliberately set out to destroy global goodwill for his government among trade negotiators and free-trade supporters, he could scarcely have been more effective.

In the run-up to Bali, India led the charge to link trade facilitation with its concerns about preserving an extensive system of food grain stockpiling. In the end, it settled for a so-called "peace clause," which kicked the can on an agricultural deal to 2017 while allowing progress on trade facilitation, which had support from rich and poor countries alike.

Indian Minister of State for Commerce and Industry (Independent Charge), Finance and Corporate Affairs Nirmala Sitharaman (L) shakes hand with U.S. Secretary of Commerce Penny Pritzker ahead of a meeting in New Delhi on July 31. Agence France-Presse/Getty Images

This meant that India and other developing countries would face no challenges for their food stockpiling and farmer subsidies while they negotiated a more permanent solution over four years. At the time, both India and the WTO hailed the agreement as a victory, the first tangible progress since the Doha round of talks began in 2001.

Defenders of the Indian government say it had no choice but to pull the plug on the Bali deal. As the argument goes, over half of India's work force is employed in agriculture. A massive "food security" program initiated by the Congress Party government last year promises subsidized food grains to two-thirds of India's 1.2 billion people, and this will require maintaining stockpiles that will likely breach current WTO norms. Moreover, the U.S. and Europe also lavish subsidies on their farmers, albeit in different ways.

While India's concerns aren't without merit—few issues are more politically explosive than grain subsidies in a predominantly agricultural country—the downsides of its stand in Geneva outweigh the potential upsides. Failure to garner support from a single developing country with a large agriculture sector undercut the fiction that India was making some sort of heroic stand on behalf of poor farmers everywhere. This newspaper reported that China, Mexico and Thailand, among others, criticized Indian intransigence.

By reneging on a deal its own negotiators had hammered out barely seven months earlier, New Delhi conveys to businesses and governments worldwide that the turmoil and unreliability of the latter Manmohan Singh years may not be a thing of the past.

New Delhi's position stems from a defense of one of the Congress Party's worst legacies—the morally bankrupt and fiscally irresponsible food security program that pours billions of dollars into a creaky procurement system notorious for leakage and graft. Instead of protecting this system, a reformist government would have used the Bali deal as an excuse to spur domestic reform. Many economists say cash transfers to the poor would both cut corruption and stave off potential WTO challenges to India's current practices from other countries.

In the longer term, India may also have cut off its nose to spite its face. At this point, India arguably has a greater stake in the success of the WTO than richer countries such as the U.S. and Japan. Should disillusionment grow with the WTO as an impossibly unwieldy organization vulnerable to capricious vetoes, pro-trade countries will likely double down on proposed regional trade agreements such as the Trans-Pacific Partnership.

If India is locked out of these blocs, as appears likely, it will undermine its goal of building a manufacturing base by integrating itself into global supply chains.

The drama in Geneva sends a disquieting message about the Modi government. On the campaign trail, Mr. Modi benefited from the support of some of India's finest conservative and libertarian thinkers on economics and foreign policy. They helped create the image of a leader who would break from welfarism in economics and reflexive Third Worldism in foreign policy.

But none of Mr. Modi's reformist backers has yet found a slot in his government. Along with a lackluster budget and a maximalist position in Geneva, this suggests less a new approach to governing India and more a doubling down on some of the worst instincts from the past. Already Mr. Modi's government is beginning to look like merely a more efficient retread of Mr. Singh's, rather than a bold departure from the past.

One India

India stands vindicated; UN body supports Narendra Modi Govt’s WTO veto Written by: Avinash Sharma Published: Monday, August 4, 2014, 19:00 [IST] Use ← → keys to browse more stories 1 UN body supports India’s WTO veto Ads by Google Men's Travel Clothing Find Men's Travel Clothing & Gear Only From TravelSmith. Shop Today! www.travelsmith.com/Mens 4 reasons why Mac is slow Wondering why your Mac is getting slow over the time? Learn more now. macpaw.com/Slow_Mac In a major boost for Narendra Modi-led NDA Government, a United Nations body too has supported India's tough stand at the World Trade Organisation (WTO) on the food security issue. The International Fund for Agriculture Development (IFAD) on Monday said that ensuring food for its people is more important than creating jobs in other nations. What has IFAD said? "Creating jobs for some other country, while people are still hungry, doesn't make sense... If I was in the position of feeding my own family or creating jobs for someone else, what would I do? What would you do?," IFAD president Kanayo Nwanze told PTI. "The bottom line is that every government has the responsibility to ensure that it can feed its own people," he said, while replying to a question whether he supports India's tough stand at the WTO. Echoing similar sentiments, IFAD's country director for India Nigel Brett said India has a big task to feed its people. Asserting its real concern of food subsidies, India on Thursday blocked the Trade facilitation agreement. The TFA is the first global trade reform since the creation of WTO, 19 years ago. Though trade diplomats in Geneva have termed this step of India as regressive and suicidal but India has made its position clear that first address our issue (food subsidies) then only we( some of the developing countries) will sign the TFA deal which was agreed upon last year in Bali, Indonesia. And the support coming from IFAD vindicates India's stand that any nation's first priority is to keep the interests of its own people. While meeting with US Secretary of State John Kerry, Prime Minister Narendra Modi clearly stated that Developing countries have a big challenge to tackle the poverty and its Governments' duty to address the problem facing by these deprived section of people. Prime Minister told Kerry,"While we don't oppose the agreement, we believe that the needs of those living on the margins of society, not just in India but elsewhere too, have to be addressed". What are India's contentions? India wants its parallel demand of food subsidy be heard along with TFA deal. New WTO rules limit the value of food subsidies at 10 per cent of the total food grain production considering 1986 as the base year. India is opposing it saying the rule with which food subsidies is being limited is outdated. India is raising its concerns by saying that while US is providing $120 billion, to its 3 million

farmers, as agriculture subsidy then why India can't give even one tenth ($12 billion) to its farmers. Currently India gives a food subsidy of barely 15 billion dollars to its 500 million farmers. India is home to about 25 per cent of the world's hungry and they depend upon Government's subsidized food programme. India provides food subsidies through programme under Food security Bill and PDS system. What is TFA and the controversy surrounding it? Trade facilitation agreement (TFA) is a trade protocol aiming to give a spur and do away with the stumbling blocks in doing international trade between various countries.The deadline to sign the agreement was July 31 and the deal has to come into force fully by 2015. It is being believed, especially by the proponents of the agreement that deal could add $1 trillion to global GDP and can also generate 21 million jobs by slashing red tape and streamlining customs. The developing country especially India and South Africa want that before pushing for this TFA why is WTO not discussing and allaying their concerns on food subsidy which is a lifeline for millions of poor in these countries. A victory for Modi's diplomacy? This support coming from a UN body would help India make its voice heard more firmly on the international platform. This support from the IFAD is yet another diplomatic success for the Narendra Modi dispensation which was being criticised by developed nations for blocking the WTO deal. It is expected that IFAD's support would force the US and the European Union to once again consider India's demand for future of TFA. But, Modi Government's real victory will be when its demands are fulfilled by the developed nations.

The Hindu

Updated: August 3, 2014 22:53 IST financial scene

India plays spoilsport at WTOC. R. L. Narasimhan

For the past one month, the one topic that has dominated policy discourse in India — and to an extent outside — has been one which normally should not have evoked such strong reactions. Trade matters, as a rule, have a limited appeal, beyond, of course, those who have a vested interest — those involved in global trade and policy-makers. Even at a time India’s international trade has been expanding at a fast clip, trade issues, especially on matters of treaties and other arcane stuff, hardly excite the public at large.

By the middle of last week, there were apprehensions that India’s stance would derail a hard won agreement at the Bali ministerial in December last. This unfortunately came true as India refused to climb down despite some persuasion by, among others, the U.S. Secretary of State and the Commerce Secretary who were in India.

Enormous ramifications

The ramifications of the failure to reach an agreement, which was considered a done deal, are enormous and affect not just India but the entire multilateral trading system embodied by the WTO. It deals a severe blow to the WTO’s credibility, already tenuous after years of stalled negotiations. Under the world body’s rules, a consensus among all 160 members is necessary: in effect that means every member has a right to a veto. The deal at Bali in December 2013, the first ever concluded under the Doha development round, breathed new life into WTO, which was fast losing its relevance.

The breakthrough was rightly considered to be a huge personal triumph for the new Brazilian Director-General, Roberto Azevedo.

Bali declaration

The Bali ministerial declaration encompassed three major issues — a Trade Facilitation Agreement (TFA); an agreement to negotiate a permanent solution for food subsidies and stocking of foodgrains to be negotiated by 2017; and an action plan for the least developed countries.

The significant achievement at Bali was the TFA. India and all other WTO members agreed to the TFA, which is meant to simplify customs procedures, facilitate speedy release of goods from ports, and cut transaction costs. According to some estimates, the TFA would save nearly $1 trillion for WTO members.

There are no two opinions that the TFA will benefit all countries although some commentators tried to inject a developed versus developing country angle. In their view, developed countries stand to gain more from a concluded TFA.

No special reasons

Even if it were so, there were no special reasons for India to play the spoiler’s role, nullifying the gains at Bali and threatening to force members to adopt a new timeline.

In fairness, India did not object to the TFA per se but wanted the other agreements at Bali, specifically dealing with food security to be discussed simultaneously.

The belief that the developed countries were dragging their feet over food-related issues while pressing for the TFA to move forward (July 31 was the deadline) has weighed with India.

There is a strong suspicion that Indian negotiators pushed themselves into a corner from which they could not extricate themselves in time.

Food security concerns are certainly important for India as indeed for many other developing countries. But agreeing to the TFA, India would in no way have compromised on those. If the objective was to turn the spotlight on food security concerns and the developed world’s relative lack of enthusiasm to pursue those, its strategy of holding out till the last minute would have made sense. However, by not agreeing to the trade facilitation deal at all, India would appear to have lost whatever clout it has had. Not surprisingly, only a handful of countries supported India’s involving many countries. None of these are big names in global trade.

The failure to gather some more support is seen as a failure of trade diplomacy. Also, the fact that the BJP then in Opposition was critical of the Bali deal might have conditioned today’s negotiators. In any case, in a matter so important as this, there has been very little communication from the government side on the issues involved, the need for India to go out on a limb and so on.

The weakening of the WTO is certainly not a good thing for India and developing countries. In the wake of the latest failure, major countries are scrambling to cobble up bilateral and plurilateral deals (involving many countries). This is an ominous development for India, which has long held the view that these trade pacts, despite their short-term advantages, stand in the way for multilateral trade. More immediately, India runs the danger of being left out of these agreements.

Kerry challenges India's Modi over WTO stance

By Shaun Tandon August 1, 2014 5:39 PM

John Kerry meets Narendra Modi

US Secretary of State John Kerry told Narendra Modi that India's refusal to ratify a key WTO trade deal sent the wrong message, as he met the country's new prime minister for the first time on Friday.

Kerry expressed optimism about expanding cooperation between the world's two largest democracies during a first visit aimed at reviving a relationship clouded by mistrust.

But a raft of disputes has cast a shadow over hopes for a warmer relationship, with India on Thursday blocking a major World Trade Organization pact to streamline customs procedures and boost global commerce.

During the meeting -- aimed at breaking the ice with a leader once shunned by Washington -- Kerry told Modi India's stance was at odds with his desire to open up the country's economy.

"We note that the prime minister is very focused on his signal of open to business and creating opportunities and therefore the failure of implementing TFA (Trade Facilitation Agreement) sends a confusing signal and undermines that very message that he is seeking to send about India," a US official quoted Kerry as saying.

"While we understand India's food security concerns, the Trade Facilitation Agreement is one that will bring tremendous benefit, particularly to the world's poor. India's actions therefore are not in keeping with the prime minister's vision."

View gallery

Visiting US Secretary of State John Kerry (L) and Indian Prime Minister Narendra Modi meet at the Pr …

But Modi told Kerry developed nations needed to display greater understanding of the difficulties faced by the developing world in meeting the needs of their poor populations.

"The prime minister emphasized the need for developed countries to understand the challenges of poverty in developing countries and their governments' responsibilities in addressing them...," a statement issued by Modi's office said.

The Press Trust of India national news agency, meanwhile, quoted commerce ministry officials as saying India remains committed to the deal as long as its demands for concessions on its anti-poverty food stockpiling deal are met.

The WTO meets again in September and "we are prepared to engage on day one with a clear understanding that our position with regard to food security and our commitment to Trade Facilitation Agreement (TFA) is 100 percent firm," said the official, who could not be named due to ministry rules.

- 'Critical to build trust' -

View gallery

US Secretary of State John Kerry looks at carpets during a visit to the Central Cottage Industries E …

Kerry urged India to work with the United States to move the WTO process forward, the official said.

Speaking on condition of anonymity, the official also said Modi told Kerry while areas of difference would always exist, "what is critical is what we do to enhance and build on our trust".

Earlier, Kerry said the United States wanted to "try to really take the relationship to a new place", following a series of diplomatic spats with India.

Washington has had little relationship with Modi, a Hindu nationalist who was refused a US visa in 2005 over allegations he turned a blind eye to anti-Muslim riots as leader of the western state of Gujarat.

The United States caught up with other Western nations during the election campaign, sending its ambassador to meet Modi who since taking office has shown no visible signs of holding a grudge over his past treatment.

Visiting US Secretary of State John Kerry (L) meets Indian Prime Minister Narendra Modi at his resid …

But US officials, who value frank and free-wheeling relationships with foreign leaders, are unsure what to expect from Modi who is known for his austere, solitary lifestyle.

Modi, who as a young man wandered the Himalayas, is seen as a very different character than his predecessor Manmohan Singh, a bookish Oxford-educated economist with whom President Barack Obama had found a kinship.

- Break from Middle East efforts -

Kerry has nurtured personal relationships as he pursues key goals including seeking peace in the Middle East.

The top US diplomat went ahead with the trip to India despite working around the clock to end the bloodshed in the Gaza Strip.

Just hours before his scheduled meeting, Kerry announced a 72-hour ceasefire between Israel and Hamas but the humanitarian truce collapsed only hours after it began Friday amid a deadly new wave of violence.

The United States has sought to put relations with India on firmer ground after the Modi visa row and a crisis in December when US authorities arrested an Indian diplomat for allegedly mistreating her servant, infuriating New Delhi.

But new disputes have kept arising.

Late Thursday, the WTO said the 160-member body had failed to approve the landmark customs pact.

India stalled the deal as it pushed for a WTO green light on the developing power's stockpiling of subsidised food. India says the policy is vital to help the poor, but rich nations charge the practice distorts global trade.

The United States voiced "disappointment" and "regret" over India's stance, while India said it protested to Kerry over reports from former NSA contractor Edward Snowden that US intelligence snooped on Modi's Bharatiya Janata Party while it was in opposition.

US officials, however, have signalled they do not want to create a new rift by renewing past concerns about Modi's track record on minority rights.

Kerry trod lightly on the issue on Thursday, saying the two democracies shared the belief "every citizen, no matter their background, no matter their beliefs, can make their full contribution".

"From women's rights to minority rights, there is room to go further for both of us," Kerry said.

Globalization and Social Destruction: Stealing Wealth and Health in IndiaBy Colin TodhunterGlobal Research, February 07, 2013Region: AsiaTheme: Global Economy, Poverty & Social Inequality 165  20  27   3776

What is happening in India right now encapsulates the current battle that is taking place across the globe, which will decide the future direction of humanity.

This country of 1.2 billion people is where modernity meets tradition head on. We are not just talking about ‘modernity’ in some kind of benign technocratic sense here, stripped of all political or ideological context; we are discussing a specific form, a variety that has little to do with progress or with making life easier for the bulk of the people, not unless that is you equate ‘modernity’ with increasing powerlessness, subjugation and the destruction of local traditions or economies.

The trouble is that ‘globalisation’ is too often confused with a beneficial notion of modernity and genuine mutual interdependence and cooperation between nation states, which in reality it clearly is not. Based on this deliberate misrepresentation by politicians and the mainstream media, we are encouraged to regard

globalisation as a positive thing and to embrace it. Globalisation has come to India and is impacting all aspects of life. So let’s take a look at it in action.

Globalisation in India

Today, individualism, inequality and capitalism are increasingly being accepted as ultimate truths and as comprising a reality of how many view the world and evaluate others around them. Social and cultural traditions dating back thousands of years are being uprooted thanks to a redefining of the individual in relation to the collective, how people should live and what they should aspire to be like, ably assisted of course by an all pervasive advertising industry that reaches out even into the small towns and villages these days. Consumerism’s world view is being fed to people and corporate news organisations are following suit with sensationalist, celebrity-related infotainment formats that dovetail with celebrity-endorsed products and commercials as well as high profile events (like the corporate ad fest known as the Indian Premier League). The result is that this world view (and the social relations endorsed by it) is becoming regarded as ‘natural’ and is not viewed for the controlling culture it is: a hegemonic one that binds people to products and ultimately to capitalism and one that is immune to its own falsehoods.

Transnational companies are in effect trying to cast India in consumer capitalism’s own sordid image: a morally, socially and economically bankrupt one at that. Hand in hand with this is an ongoing civil war in the ‘tribal belt’ and other violent conflicts elsewhere in the country. Powerful foreign (and Indian) corporations with the full military backing of the Indian state are attempting to grab lands for various industries, including the resource extraction, nuclear and real estate sectors. It is for good reason that environmentalist Vandana Shiva argues that the plundering of Indian agriculture in order to cast it in the image of one that is beneficial for Western interests is resulting in a forced removal of farmers from the land and the destruction of traditional communities on a scale of which has not been witnessed anywhere before throughout history.

The ratio between the top and bottom ten per cents of wage distribution has doubled since the early 1990s, when India opened up it economy. According to the 2011 Organisation for Cooperation and Economic Development report ‘Divided we stand’, the doubling of income inequality over the last 20 years has madeIndiaone of the worst performers in the category of emerging economies. 42 per cent of 1.2 billion live on less than $1.25 per day, the highest number of poor in the world.

But these are the types of things that happen when US corporations and their stooges in the US government or at the IMF, World Bank, WTO or some other political machinery come beating at a government’s door with promises, bribes, threats or lop-sided deals. If you have read John Perkins’s book ‘Confessions of an economic hitman’, you will immediately get the point here. Moreover, the impulse for Western capitalism to seek out foreign markets has been heightened due the current plight of Western economies.

And don’t forget that it was these same corporate swindlers that helped destroy the post-1945 Keynesian consensus and tip the balance in favour of elite interests in the first place during the early 1970s, which eventually led to the depression of wages and therefore demand and thus economic crisis. The debt-inflated economies that resulted from the 1980s onwards could not be sustained, and places like India now seemingly represent rich pickings for a certain brand of slash and burn capitalism.

Call it ‘globalisation’ if you must, but let’s call it for what it really is: imperialism. In an effort to maintain profit margins, elite concerns are going abroad to plunder public assets and exploit human labour or trample on human life.

The worst thing is that it doesn’t have to be this way. Modernity and progress should be about improving quality of life of the masses and a wider sense of well-being or happiness. And, according to various ‘well-being’ surveys in recent years (Happy Planet Index, World Values Survey and the Human Development Index), the key to achieving such things may well lie in good health, decent education, greater levels of social equality and welfare provision, self-sustaining communities and people living within the limits set by

the environment. It’s for a reason that the US and UK tend not to do so well in such surveys, as they have been the most strident proponents of economic neo-liberalism and empire in recent years. Once political leaders abdicate responsibility for organising a society in a way that works for the public good and place emphasis on ‘deregulation’ and cede power to ‘the market’ (aka giving the corporate thieves the keys to their home), what we are left with are places like the US where capitalism and oligarchy reign supreme and ‘socialism’ becomes a misused and abused concept and identified not as a realistic alternative, but as some awful conspiracy that lies behind the rot.

As India hangs onto the coat tails of Uncle Sam’s agenda for global hegemony, are we to sit back and watch Indian society being hollowed out in a similar way to that of the US? Possibly so, if we are to take the food and agriculture sector as a starting point.

The globalisation of food and agriculture in India

The government has already placed part of agriculture in the hands of powerful western agribusiness. You don’t have to look far to read the many reports and research papers to know the effects – biopiracy, patenting and seed monopolies, pesticides and the use of toxins leading to superweeds and superbugs, the destruction of local rural economies, water run offs from depleted soil leading to climate change and severe water resource depletion and contamination.

It is no exaggeration to state that foreign corporations are already shovelling their poison into the mouths of Indians, which are being held open courtesy of the compliant Indian state. ‘Mouths’ and ‘poison’ are being used in a literal sense here. Traditional agricultural practices and, by implication food, is being destroyed by Western agribusiness. People are becoming sick of it. Again, ‘sick’ is being used in a literal sense. From how food is produced, to what ends up on the plate, both food sovereignty and the health of the nation are under threat. Export-oriented policies that are part of the structural adjustment of Indian agriculture have led to a shift in India from the production of food crops to commodities for exports. Food is being increasingly controlled by the likes of Monsanto, Syngenta and their subsidiaries, thanks to the Knowledge Initiative on Agriculture which they had a direct hand in drawing up, and people are becoming ill due to the chemical inputs that are now a defining feature of modern agriculture and food processing.

One of the most revealing pieces about the impact of such chemical-based agriculture appeared in Bangalore’s Deccan Herald newspaper just last week (Transformation of a food bowl into a cancer epicentre). Gautam Dheer writes that the contamination of drinking water by pesticides is a major cause of cancer in India’s Punjabstate. At this point, although various other factors may also be to blame, it is worth noting that cancers are on the rise in many of India’s urban centres. For major organs, India has some of the highest incidence rates in the world. The links between pesticides and cancers and illnesses are well documented in Western countries (for instance, Dr Meryl Hammond, Campaign for Alternatives to Pesticides, told a Canadian parliament committee in 2009 that a raft of studies published in prestigious peer-reviewed journals point to strong associations between chemical pesticides and a vast range of serious life-threatening health consequences. And that’s not even mentioning the impact of hormones or other additives in our food).

India is one of the world’s largest users of pesticides. Ladyfinger, cabbage, tomato and cauliflower in particular may often contain dangerously high levels and fruits and vegetables are sprayed and tampered with to ripen and make them more colourful. Research by the School of Natural Sciences and Engineering at the National Institute of Advanced Studies in Bangalore reported in 2008 that many crops for export had been rejected internationally due to high pesticide residues.

Should we expect the health outcomes in India to be any different as it adopts or has already adopted a system of chemically dependent agriculture and food production? The mainstream media often cites the increasing prevalence of certain diseases as due to people ‘adopting Western lifestyles and habits’. The individualization of health issues (poor lifestyle choices) is a convenient explanation which diverts

attention from structural issues, not least how India’s food and agriculture sector is being recast by Western corporations and the possible health impacts thereof.

In his piece, Gautam Dheer argues that Punjab stares at an inevitable crisis. Agriculture has become increasingly unsustainable, and the model practised by desperate debt-ridden farmers has only meant more indiscriminate use of pesticides, something which is now being linked to the alarmingly high incidents of cancer in Punjab. Gautam writes that a study of two districts in Punjab revealed the presence of pesticides such as heptachlor and chloropyrifos and other heavy metals in samples of drinking water and concluded that these had led to a higher incidence of cancer. The Post Graduate Institute of Medical Education and Research (PGIMER) in Chandigarh states that the indiscriminate use of pesticides in crop production in Punjab is one of the reasons for high incidents of cancer in Punjab.

Moreover, Punjab’s ground water table has dramatically dipped due to over exploitation by chemical-dependent agriculture, which is by its very nature heavily water-intensive. In several places, the use of ground water has either been completely banned or restricted. Although Punjab pioneered the ‘Green Revolution’ (or perhaps because it did), the average annual growth of the GDP from agriculture and allied sectors in the last seven years for Punjab has remained at a mere 1.76 per cent, against the national average of 3.7 per cent. In fact, it plunged to below onr per cent in last fiscal year.

What’s the answer: more chemical inputs to try to boost yields? More water depletion, increased contamination?Punjab already has 90 cancer patients for every 100,000 of its population: ten times more than the national average. Giant community reverse-osmosis plants have come up in almost all districts of the state to help matters with safe drinking water

In Punjab, groundwater is continuously declining in 85 per cent of areas within the state. Nitrate presence in water has gone up by ten times in the past four decades. Of 138 hydrogeological blocks, over 100 are listed as dark or grey zones due to over-exploitation. Groundwater levels are going down by about 60 cm every year. As per official estimates, nearly 35,000 pumps have been going underground each year over the last four years.

Punjab has to find a quick solution for this form of agriculture that is not only unsustainable, but deathly too. Environmentalist Vandana Shiva argues that this type of intensive chemical-industrial agriculture, with its reliance on vast amounts of fresh water, fertilisers, pesticides and the like and is destroying biodiversity and is unsustainable in the long term. It might have increased production in the relative short term, but it has been at a terrible cost to health and the environment. The situation in Punjab could just be the tip of the iceberg.

For Shiva, the answer is to return to basics by encouraging biodiverse, organic, local crop systems, which she asserts is more than capable of feeding India’s huge population – and, unlike chemical intensive agriculture – feeding it healthily.

In the meantime, powerful politically-connected and often extremely unscrupulous Big Agra and Big Oil concerns involved in fertiliser, pesticide and seed manufacturing (and let’s not forget the genetically modified sector) have a lot invested in maintaining the current, highly profitable system. After all, the logic of global capitalism is to ensure profits for shareholders and thus grab increasing shares of markets wherever they may be and, as John Perkins notes, by all means necessary. An article in the journal Hortscience in 2009 by Donald R Davis (Declining fruit and vegetable composition: what is the evidence?) indicated falling nutritional values as a result of industrialised agriculture.

Should we be surprised? In a bankrupt system, nutritious, healthy, life-sustaining food or healthy environments are but secondary concerns.

India’s WTO problem: A proposal

Posted On: 31 Jul 2014 Section: Perspectives

Topics:   Trade , Agriculture

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WTO , food security

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Arvind Subramanian Peterson Institute for International Economics and CGDevasubramanian@piie.com India is threatening to block the WTO Trade Facilitation Agreement unless its agricultural policies are exempted from multilateral scrutiny. This article contends that while India’s objectives on agriculture are valid, its tactics in withholding support for TFA are perhaps less so. India should withdraw its opposition, reformulate its position on agriculture to persuade others of its merits, and revisit the WTO issue in the near future.

After more than a decade of failure to break an impasse on a new global trade round, the World Trade Organization (WTO) managed last year in Bali to accomplish the modest feat of adopting a new Trade Facilitation Agreement (TFA), establishing faster and more efficient customs procedures to encourage more international commerce. Now India is threatening to block that accord unless its agricultural policies are exempted from multilateral scrutiny. Joining India in threatening to hold up the accord are, reportedly, Cuba, Venezuela, and Bolivia.

India is hardly unaccustomed to being an outlier on trade issues. In this case, however, its objectives on agriculture are valid, especially if better articulated, but its tactics in withholding support for the TFA perhaps less so. India should withdraw its opposition to the TFA, reformulate its position on agriculture to persuade others of its merits, and revisit the issue in the WTO in the near future.

Objectives: Preserving current agricultural policiesIndia’s concerns are not related to the TFA itself. Rather they are an attempt to head off potential challenges by its trading partners to its policy of price supports for rice and wheat that allegedly (or potentially) breach India’s obligations undertaken in the Uruguay Round (UR) trade agreement of 1994. In that agreement (which also established the WTO) India agreed to limit support to farmers via domestic subsidies called “aggregate measurement of support” or AMS. Trading partners also want India to curtail any potential exporting of excess food stocks at subsidised prices.The root of the problem is the gap between the structure of India’s polices and the structure of its WTO obligations. In turn, this gap owes to a sharp rise in world agricultural prices since 2007, combined with a major expansion of India’s domestic commitment to subsidise consumers of foodstuffs.

India’s agricultural policies used to consist of protecting farmers via tariffs and subsidising consumers via the Public Distribution System (PDS). India provided very little price support for farmers, (via minimum support prices, or MSPs) whose prices were substantially below world prices. It would have been far more efficient to provide farmers with subsidies, as the United States and other advanced countries have done. But subsidies involve direct fiscal expenditures, which India wanted to avoid.

The Uruguay Round essentially codified these policies, giving India leeway to raise tariffs on rice to between 70% and 80% and on wheat, 100%, without breaching WTO obligations. The generous freedom to protect farmers via tariffs that India had obtained, and because India at that time had few domestic subsidies, led it and other developing countries to pay less attention to their obligations on domestic subsidies, which were set at a relatively constricting 10% of output.

Advanced industrial countries, by contrast, had tighter obligations on tariffs, which they had to reduce by 36% from levels that were generally lower than that for developing countries. They were also obliged to reduce export subsidies by 36%. But they were allowed more space to support their farmers via domestic subsidies reflected in smaller reductions (only 20%) in their domestic subsidies.

When the food price shock hit the world in 2007, the focus in India and elsewhere shifted dramatically from the producer to the consumer. India slashed its tariffs (from about 30% to 50% to near 0% for rice and wheat), raised the minimum support prices offered to farmers, and expanded the safety net for food consumers, culminating in the food subsidy bill enacted in 2013 by the previous Congress Party-led government of Prime Minister Manmohan Singh.

Using tariffs to protect farmers was eliminated because the cost to consumers would be too high, as would the cost to the government of subsidising consumers. As a result, the government had to switch to domestic subsidies via generous minimum support prices, which also enabled it to procure stocks for food security purposes.

In structure, India’s agricultural policies — on the producer side — started a few years ago to resemble that of advanced countries. (Of course, the food price increases of 2007 have led to some automatic reductions in production-related subsidies in advanced countries; they have over time also moved toward more direct support for farmers decoupled from production, the so-called “green box” of permissible subsidies in the WTO).

The problem with these changes is that the structure of India’s WTO obligations remains as before. The oddity of the Indian situation from a WTO perspective is that India is permitted by the WTO to adopt the inefficient policy of raising tariffs but unable to pursue the less bad policy of price supports.

There are two ways out of this dilemma for India: Change domestic policies or change WTO obligations. India’s domestic agricultural policies are indeed inefficient: Food subsidies and even income support to

poor farmers should gradually be replaced by cash transfers (which would be WTO-consistent “green box” subsidies). But implementation for such changes takes time — several decades in the case of even the United States and Europe. India’s concern to not be prematurely forced into such ideal or minimally distorting policies is thus not unreasonable.

Therefore, India must attempt to change the structure of India’s WTO obligations. Indian agricultural trade policy experts such as Ashok Gulati and Anwarul Hoda have suggested that the WTO change the way it calculates domestic subsidies, giving India more wiggle room to continue its current policies. Such an approach makes sense, especially because the current calculations of subsidies are, absurdly, based on international prices that prevailed nearly three decades ago. This change in measurement is desirable, but India’s problems may well go beyond the measurement of subsidies; and in any case India’s trading partners would demand something in return for such an adjustment.

To show its good faith, India should offer to change its WTO obligations to make them less inefficient and trade distorting. It should offer to restrict its ability to impose tariffs in return for greater — but not open-ended — freedom to grant domestic subsidies. India would then be saying to rich countries: “Our agricultural policies are similar to yours, so we want our WTO obligations to be similar to yours, too.” It could argue further that the structure of obligations is biased against India because rich countries can subsidise agricultural exports, while India cannot.

India’s offer would codify more efficient and less distorting policies than India’s current WTO obligations. India would not just be seeking more freedom; on balance it could accept new limits to its freedom on agriculture, especially on tariffs. Of course, the exact details of the new level of maximum, or bound, tariffs and subsidies will need to be worked out, especially to ensure that the domestic subsidy commitments are not open-ended. The fair principles underlining the offer would be key.

Tactics: Blocking the TFAIs holding up the TFA the best way for India to secure its objectives on agriculture?

The July 31 deadline for adoption of the Bali agreement does provide India some leverage to advance its broader objectives on agriculture.

Despite the criticism, India’s threat to block the TFA is not standing in the way of great global trade advancement. Gains from the TFA have been grossly overstated. Reforming customs administration, a key ingredient of trade facilitation, is an important objective, but the TFA neither adequately incentivises nor forces such reforms that will be politically difficult within member countries.

Nevertheless, India looks obstructionist by opposing the TFA, especially for the new government, led by Prime Minister Narendra Modi, which is trying to project an image of being investor- and market-friendly and constructive in its international engagement. The reputational costs of blocking the TFA could be high.

India should worry as well about appearing isolated in its current position, with China, Brazil, and Russia — the band of BRIC brothers as it were — and many other emerging market countries clearly distancing themselves from New Delhi. A policy that has limited support among the WTO membership looks weak, lacks legitimacy, and seems unlikely to succeed.Indeed, if India succeeds in its opposition, and the Bali deal collapses, the blow to an already weak WTO would be significant and India would bear much of the blame. And the costs of a weak and delegitimised multilateral trade system are greater for countries such as India, which is excluded from the emerging Asian trade architecture underpinned by the US-led Trans-Pacific Partnership (TPP).

India should thus withdraw its opposition to the TFA and reformulate its position on agriculture along with a number of countries that likely face a similar predicament. India should also proceed to persuade its partners of the merits and fairness of its new position over the next few months, and revisit this issue at the WTO in the near future.

Reculer pour mieux sauter, as the shrewd French say.

- See more at: http://ideasforindia.in/article.aspx?article_id=324#sthash.EuV0HeMc.dpuf

The Diplomat

India’s Dangerous Food SubsidiesIndia’s agricultural subsidies are threatening its own food security, while harming farmers worldwide.

By Dan PearsonAugust 27, 2014 

India’s trade-distorting farm subsidies are already far in excess of the limits agreed to in their World Trade Organization commitments. Now India wants WTO members to look the other way while it increases subsidies further. With global commodity prices weakening, those subsidies are likely to damage farmers in other countries, tempt tit-for-tat reactions from their governments, and threaten the rules-based international trading system. To staunch that threat, agricultural trading nations should bring a WTO dispute-settlement case seeking an end to India’s abusive practices.

India purchases basic crops from farmers at artificially high prices, and then sells a portion in 500,000 “fair price” stores to some 800 million poor people at low prices.  An estimated 40 percent of the food never reaches its intended consumers.  Much of it escapes from government control due to graft and corruption. The remainder of the wastage is due to inadequate storage and transportation facilities. The Food Corporation of India (FCI), a government agency, held 68.7 million metric tons (MMT) of grain in storage on July 1. Three MMT of that supply (equivalent to the annual wheat consumption of the Philippines) were kept in sacks on the ground covered only with plastic sheeting.  Government-induced loss of food seems particularly cruel in a country where many people remain hungry.  Yet India continues to exacerbate this inefficient system.

India’s farm subsidies harm its own economy. Farmers are incentivized to devote more land and water to subsidized crops (wheat, rice, sugar, etc.) desired by the government. This leads to less production and higher prices for other items (fruits, vegetables, etc.) that consumers also want to buy. India justifies these policies under the guise of achieving “food security” by encouraging domestic production of basic crops. The same excuse is given to justify commodity prices being held above world levels through the use of high tariffs and other import restraints. Most economists would agree, however, that security of supply is hurt rather than helped by import restrictions. A failure of India’s annual monsoon rains can lead to drought and reduced crop output.  By relying so heavily on its own production, India is more vulnerable to food supply shocks than would be the case if its agricultural economy was integrated fully into the large and resilient global market.

WTO rules on agricultural subsidies came into effect in 1995 at the conclusion of the Uruguay Round negotiations. WTO members strongly supported limits on trade-distorting subsidies because the global marketplace had been wracked by rampant subsidy competition among wealthy nations, most prominently the European Community and the United States. Farmers in non-subsidizing countries suffered with low prices. The Agreement on Agriculture addressed this problem by placing limits on trade-distorting subsidies, while allowing a wide range of non-distorting government services and payments to be provided to farmers.  It also permitted governments to spend as much as they wish to provide food to low-income people. An insightful (and conservative) 2011 study by DTB Associates calculated that India was then exceeding its allowed domestic support levels by a minimum of $37 billion.  That much subsidization can do serious damage to world commodity markets and the farmers who depend on them.

India is now proposing that the WTO should reverse position and endorse an increase in distorting farm subsidies. Keep in mind that India is not a small player in global agriculture. It not only boasts the world’s second largest population, it also has the second largest area of arable land. Recently India ignored the WTO’s prohibition on new export subsidies and began to use them on sugar, thus undercutting sugar exporters such as Thailand and Brazil. If India won’t follow the rules to which it has agreed, other countries are likely soon to follow suit.

Last December, when India was resisting conclusion of the WTO Trade Facilitation Agreement (TFA), it received assurances that there would be a “peace clause” under which other countries would agree not to challenge its agricultural subsidy programs. When India finally blew up the TFA in July, the peace clause was blown up along with it. That’s just as well, because the WTO Agreement on Agriculture is genuinely worth defending. WTO members should do India and the world a favor and file a dispute-settlement case against India’s agricultural policies. The goal would be to encourage India to shift toward using farm support measures that the Agreement on Agriculture specifically allows. Such an outcome would be far more constructive than pushing the global agricultural economy back into a subsidy war in which the clear losers would be taxpayers, farmers in other developing countries, and the rules-based international trading system.

Dan Pearson is a Senior Fellow for Trade Policy Studies at the Cato Institute. Before Cato, he served 10 years on the U.S. International Trade Commission.