India steals the show at Bali meet; 'peace clause' stalemate continues

Amid heated talks in a serene Indonesian island resort on the second day of the World Trade Organization’s (WTO’s) ninth ministerial conference (MC9), India swept all off their feet with its grandstanding on food security, even as a stalemate on the contentious ‘peace clause’, or an interim measure to do away with the limit on food subsidies, continued.

“For India, food security is non-negotiable… The due restraint provision (or the peace clause), in its current form, cannot be accepted, as it has several shortcomings. It must remain in force till we reach a negotiated permanent solution and provide adequate protection from all kinds of challenges,” asserted a visibly piqued Commerce & Industry Minister Anand Sharma, referring to the negotiating text on agriculture as “half baked”.

Sharma, whose address at the plenary session of the WTO MC9 became a talking point here, said the stalemate on agricultural subsidies, since talks of having a global trade deal started 12 years ago, had led to “frustration and cynicism”. He rejected the proposed interim measure and trade facilitation agreement, risking an outright collapse of the ongoing talks.

In a voice that caught the attention even of the international media, Sharma said India would not accept what was on the table in the form of a so-called Bali package and demanded immediate changes to it. Elucidating the country’s firm stand on the matter, Sharma said India was ready to engage in talks if countries, especially the rich ones, agreed to a binding commitment on the interim measure and its continuation.

Later in the day, as member countries huddled up together inside a room to hammer out some consensus for more than three painstaking hours, while everybody waited with bated-breath outside, Sharma asserted India’s position more vehemently and refused to move “even an inch”, highly placed sources told Business Standard.

The minister is believed to have said there that his country can “show flexibility and compromise on anything but the core issue of food security”. According to a top official who was inside the meeting room, Sharma said: “An

interim measure has to be succeeded by a permanent step. That’s simple English language to me. Period.”

However, in the process of taking a firm stance, India lost the support of some of its traditional allies, though it gained some new friends. By the sunset, rifts were visible within the G33 coalition of developing countries, which had once floated the food security proposal together.

Interestingly, while China and Indonesia chose to look the other way by agreeing to a four-year interim measure, India could shore up massive support, mainly from African and Latin American countries like Brazil, Nigeria, Uganda, Egypt, South Africa, Bolivia, Namibia, Argentina, Venezuela, Kenya and Nicaragua. There were 55 countries that enumerated their positions here on Wednesday. Of those, 25 stood by India’s side on rolling over the interim measure until a permanent solution was arrived at.

According to WTO Spokesperson Keith Rockwell, some members of the G33 grouping did not support India’s stand during the negotiations, while the entire Africa emerged as a new ally. On the other hand, the developed countries stuck to their guns.

EU Trade Commissioner Karel de Gucht said India would have to show “necessary flexibility.” He added, if “each one sticks to its own solution, there will be no agreement”.

US Trade Representative Michael Froman said what appeared in the Bali package was not what was expected but his country was ready to show flexibility, because if talks in Bali failed it would harm developing countries more than the developed world.

“We cannot take success for granted at this time. We can have an agreement that serves us all,” Froman said. The US and EU are quite keen on culling out a trade facilitation agreement in Bali, because it leads to a massive cut in transaction costs for exporters.

It remains to be seen what comes out in the next couple of days as negotiations in this quaint island get strongly manoeuvred by the 159 member countries.