India’s food security and trade sovereignty hang in the balance as it faces US push to curb farm subsidies and digital tariffs at WTO meet
The Narendra Modi government is facing a grim test on its multilateral trade sovereignty from the United States at the World Trade Organization’s 14th ministerial conference, which kicks off in Yaounde, the capital of Cameroon, on Thursday (March 26).
After nearly securing a pound of flesh from New Delhi in the unfinished bilateral free trade agreement, Washington is now piling pressure on India to agree to its maximalist reform agenda—one that would destroy the core principles on which the WTO’s rules-based, member-driven, and multilateral system is established.
Let’s call this what it is: a hostile takeover. In one go, the US and its Northern allies seem bent upon creating what is called a plurilateral trading system at the WTO, so that agreements can be rammed through between a coalition of willing countries.
US and WTO reforms
On the eve of what is referred to as MC14, the United States has unveiled a comprehensive proposal on “further perspectives on WTO reform”. It seeks fundamental changes to decision-making by consensus. It calls for differentiation among developing countries for enjoying special and differential treatment—a move designed specifically to knock India off from exercising this treaty right. And it demands a “level playing field” aimed at denying policy space for developing countries to provide industrial and other subsidies. Translation: The US wants to tie India’s hands while keeping its own firmly on the lever of power.
Also read: US trade deal: 'India has accepted opposite of what it fought for at WTO'
Washington has now extended its list of proposed WTO reforms to three additional topics: The application of the Most-Favoured Nation (MFN) principle, which requires a country to provide the same tariff treatment to all countries; and changing the role of the WTO Secretariat. The US, the world’s largest economy, wants essential security to implement its domestic trade priorities and laws—even if they violate the rules it helped incorporate at the time of creating the WTO in 1995. So much for being the guardian of the global order.
By pursuing a maximalist agenda, the US could turn the multilateral WTO upside down and possibly create a new differentiated plurilateral system. In one go, the US proposal seems to “torpedo” the core principles of the Marrakesh Agreement once and for all, said several trade envoys who asked not to be quoted. They are right. This is not reform. This is demolition.
After having upended the rules-based WTO with its allegedly WTO-illegal unilateral reciprocal tariffs—dismissed by the US Supreme Court but still being pursued under Section 122 of the US Trade Act of 1974—the latest WTO reform proposal by the US is astounding in its attempt to legitimize its allegedly illegal acts. It has already “weaponized” tariffs by dismantling the MFN principle and the sanctity of binding tariff commitments. Yet its chief architect, Ambassador Jamieson Greer, who was the main force in imposing the US’ trade agenda on India, audaciously notes that the “current global order in international trade, overseen by the WTO, is untenable and unsustainable.” Of course it is—for those who want to break it.
India, enemy number one
For the US, India is enemy number one at the WTO. Let that sink in. It reckons India as a major stumbling block on a variety of issues ranging from agriculture and digital trade to WTO reform and several others. On agriculture, the crucial question is whether India will be able to safeguard its public stockholding programme for rice and wheat. The US has been ruthlessly opposing India’s PSH programmes based on what are called de minimis subsidies for cereals.
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“This situation is not because we have inefficient farmer” or “this situation is because of President Trump’s reciprocal tariffs,” but “this is because for years, administrations have let our competitors (India) go away with (farm) subsidies that result in price distortions in nearly all our export markets,” the US declared during a testimony before the Senate. The US rice lobby thundered: “India has demanded permanent exceptions to market price support at every ministerial meeting since 2013 and this demand has come up repeatedly at negotiating meetings in the lead-up to MC 14. An American rice farmer isn’t competing against an Indian rice farmer—they are competing against the Indian government.”
Indeed, the US submitted a counter-notification against India’s rice and wheat subsidies, describing how they have breached the de minimis subsidy commitment by a large margin. If India does not fight to the finish on the permanent solution for public stockholding programmes in Yaounde, it will face an ugly situation soon as Washington prepares to launch a trade dispute against New Delhi at the WTO. This is no longer diplomacy. This is a firing squad.
Though the India-US bilateral trade agreement seems to be put on hold due to the adverse effects it might have on the state elections in West Bengal, Assam, Tamil Nadu, and Kerala, whatever details have been made public so far clearly suggest it is a one-way street—where the future of 800 million (80 crore) poor Indian farmers hangs in the balance. Eight hundred million. Let that number echo.
E-commerce moratorium
Beyond agriculture, India’s resolve on removing the moratorium for not levying customs duties on electronic transmissions will be crucially tested at the conference. The situation would not have reached this boiling point if Commerce Minister Piyush Goyal had not yielded under pressure from the United Arab Emirates and the European Union in Abu Dhabi at MC13. Now, the US is insisting on a permanent moratorium to buttress demands from its GAFA companies—Google, Amazon, Facebook, Apple, and others. India and several developing countries will lose tens of billions of dollars if the moratorium is continued indefinitely. Tens of billions—sacrificed at the altar of Big Tech.
Also read: Boeing, Nvidia and more: India can easily buy $500-B US goods, says Goyal
Against this backdrop, it is moot whether India will drop its guard on the multilateral front too, as it did in bilateral trade agreements. Its core concerns in agriculture—particularly the much-delayed permanent solution for public stockholding programmes for food security—hang in the balance. Will New Delhi once again trade sovereignty for short-term convenience?
Isolated on IFDA
On another controversial issue called the Investment Facilitation for Development (IFD), India has all along opposed it and its incorporation into the list of the WTO’s plurilateral agreements since 2016. Yet it has now snowballed into what the partisan Director-General considers a major boon for African countries if agreed at the Yaounde meeting.
The IFD Agreement is assiduously promoted by China with support from some 130 countries. On Wednesday, the Chinese commerce minister is holding a huge event with 20 African ministers on investment in the continent.
India, which is gradually opening the doors for Chinese investments recently, faces a litmus test on its multilateral position against IFDA. The US, though not a party to the IFDA, is not opposing its adoption into the WTO’s rulebook. In other words, India finds itself isolated—not by accident, but by design.
India on the edge
Beyond that, India—which has fiercely opposed WTO reform based on a top-down agenda of major developed countries—has a battle on its hands at the Yaounde meeting. Under the rubric of WTO reform, several developed and middle-income countries, with the active support of the trade body’s Director-General, Ngozi Okonjo-Iweala, are attempting to reduce the 166-member multilateral trade body. Now, with the US having joined the WTO reform bandwagon, it remains to be seen what Minister Goyal will do when the meeting concludes on Sunday.
Also read: India fully protects sensitive wheat, rice, poultry under trade pact with US: Piyush Goyal
In short, India is on the edge at the Yaounde meeting. The question is not whether the United States will push. The question is whether the Narendra Modi government will finally stand for India’s multilateral trade sovereignty—or whether it will surrender it, yet again, in line with several recent moves. The world is watching. Farmers are watching. History is watching.
(The Federal seeks to present views and opinions from all sides of the spectrum. The information, ideas or opinions in the articles are of the author and do not necessarily reflect the views of The Federal.)
