WTO pact to ease trade rules collapses

by World Grain Staff
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BALI, INDONESIA — The first World Trade Organization (WTO) pact in two decades collapsed on July 31 after a handful of member states would not implement the Trade Facilitation Agreement (TFA) by the deadline. 

WTO Director General Roberto Azevêdo told WTO ambassadors that despite intensive consultations “we have not been able to find a solution that would allow us to bridge the gap” on the adoption of the protocol on the TFA. He urged members “to reflect long and hard on the ramifications of this setback.”

WTO ministers had already agreed to the global reform of TFA, but India made last minute objections that could not be resolved. The nation was seeking concessions on agricultural stockpiling. 

“Ensuring food security for its people is of paramount and strategic importance for any country,” the Federation of Indian Chambers of Commerce and Industry, said in a recent statement. “But we are also faced with the need to bring to our society fundamental economic, and job creation, benefits from more efficient global trade integration.”

In exchange for signing the TFA, India wanted more progress on a pact giving it more freedom to subsidize and stockpile grain. India’s new national government wants a permanent agreement on stockpiling at the same time as the TFA, ahead of a 2017 target set in Bali last year. 

The TFA would have reduced trade costs, especially in developing countries, and would have generated hundreds of billions of dollars in much needed economic activity, said U.S. Trade Representative Michael Froman.

“The United States is fully committed to the multilateral trading system embodied in the WTO. But the WTO system relies on its members to implement the commitments to which they have agreed,” Froman said. “Geneva will be quiet for the next several weeks. This is a good time for all of us to reflect on these developments and to consider the implications going forward. We will consult with our trading partners on potential paths forward.”

U.S. Secretary of State John Kerry, who was in New Delhi, India, told Indian Prime Minister Narendra Modi that India’s refusal to sign the trade deal sent the wrong signal. 

"Failure to sign the Trade Facilitation Agreement sent a confusing signal and undermined the very image Prime Minister Modi is trying to send about India," a U.S. State Department official told reporters after Kerry's meeting with Modi.

Most members had expected the pact, which according to some estimates would add $1 trillion and 21 million jobs to the world economy, to be approved this week. Many were shocked when India unveiled its veto. 

"Australia is deeply disappointed that it has not been possible to meet the deadline. This failure is a great blow to the confidence revived in Bali that the WTO can deliver negotiated outcomes," Australian Trade Minister Andrew Robb said. "There are no winners from this outcome – least of all those in developing countries, which would see the biggest gains."

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