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Published December 02, 2013, 10:25 AM

WTO deal teeters

India may hold the key to the credibility of the World Trade Organization and to a trillion-dollar trade deal that apparently was derailed last week, diplomats in Geneva say.

By: Tom Miles and Manoj Kumar, Reuters

India may hold the key to the credibility of the World Trade Organization and to a trillion-dollar trade deal that apparently was derailed last week, diplomats in Geneva say.

WTO chief Roberto Azevedo says negotiations by ambassadors in Geneva had gone as far as they could. Specific difficulties and last-minute backtracking now can only be overcome by trade ministers at a biennial meeting Dec 3. to 6, he says.

“If we are to get this deal over the line, it will need political engagement and political will,” Azevedo says.

U.S. Ambassador Michael Punke says that at 10 p.m. on Nov. 24, he had been hopeful the WTO would clinch the first worldwide trade deal in its 18-year history. But last-minute problems arose that lasted until breakfast on Nov. 25.

“By 7 a.m. Monday (Nov. 25) morning, it appeared that the deal was no more,” Punke says. “We’re skeptical that those who appear to be refusing to reach agreement can now be convinced by another long night of negotiation.”

Several diplomats, asked who was to blame, mentioned India without being prompted. Others also named Venezuela, Bolivia and Cuba, but their objections had been maintained throughout. India had earlier won a large concession on agriculture but was said to suddenly turn into an obstacle, apparently to gain more in agriculture.

The bulk of the trade deal, supposedly the “low-hanging fruit” of the moribund Doha round of talks, is about streamlining customs procedures globally. But much of the negotiating time has been devoted to India’s demand.

In a breakthrough the U.S. initially opposed, India won the right to subsidize food and stockpile it in the name of food security, breaking the usual WTO rules on food subsidies.

Fulfilling an election promise made in 2009, India’s coalition government this year expanded a welfare program to give ultra-cheap food to about 800 million people. The Congress Party, which leads the government, has been stung by polls showing it may lose ground in the next general election.

Sinking ship

Diplomats at the WTO say they are not sure if India — and the other holdouts — wanted more concessions, were bent on preventing a deal or just wanted a chance for their ministers to make grandstanding demands in Bali.

“Some members just want this ship to sink. It’s better that we fail in Geneva, and then the ministers won’t have to fail,” one ambassador says.

Punke says the “intransigent few” should not be rewarded with more concessions.

Several diplomats point out the risks in India’s apparent tactics. The draft agreement protects India against a slew of trade disputes that could result in billions of dollars in trade sanctions. Under a compromise in the Bali text, India’s laws would not be challenged for four years.

The Indian food-security law raises spending on food subsidies 45 percent, to about $21 billion, up from about $14.4 billion in the current fiscal year. If the Bali deal fails, the additional subsidy would be illegal under existing WTO rules.

At its Nov. 28 meeting, Prime Minister Manmohan Singh’s cabinet was expected to mandate the negotiators to seek a deal in Bali that ensures India can run the food-subsidy program without many restrictions, a senior official at India’s trade ministry says.

The official, who declined to be named because of the sensitivity of the issue, says India was making all-out efforts to ensure a deal at Bali. He hints that India was willing to cut import duty on some farm and industrial goods to ensure the deal, but gave no more details.

The International Chamber of Commerce says the Bali deal would add $960 billion to the world economy and create 21 million jobs, 18 million of them in developing countries.

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