Another US blow to multilateralism

The collapse of Buenos Aires WTO talks reflects poorly on US policy, which still denies food security to billions.

The US and India, at the helm of the developed nation and developing nation blocs, respectively, have been engaged in a fight at the World Trade Organisation (WTO) over the issue of trade-distorting agricultural subsidies that has culminated in a collapse of talks at the recently concluded 15th ministerial conference in Buenos Aires, Argentina.

The negotiations were on the subject of developing countries’ food procurement subsidies that are capped at 10% of the total value of agricultural production based on 1986-88 prices. The developing countries argued that the base year prices are 30 years old and need to be revised in order to meet their countries’ food security needs, particularly with India adopting the Right to Food Act, 2013, that increased the level of government support for food procurement activities substantially.

Indeed, recent reports, particularly as characterised by Washington, suggest that India exceeds its 10% cap substantially and will continue to do so. Food Corporation of India (FCI) purchases soared from $5.5 billion in 2003-2004 to $14 billion in 2012-2013, and averaged $14.6 billion annually in 2011-2014.

Therefore, since 2012, proposals and counter-proposals to resolve the issue of government food subsidies have been put forth both by developing and developed nation blocs. Developing countries’ proposals have included revising and increasing the base year prices, as commodity prices have generally risen since 1986, and allowing developing countries with an inflation rate of over 5% to adjust how they calculate subsidies, thereby avoiding lawsuits. Developed countries killed both proposals.

Finally, a peace clause was adopted at the 2013 Bali conference, wherein legal action was barred, first for four years and then indefinitely (until another solution was found) against programmes that stockpiled food for food security purposes.

That solution was to come in this recently concluded ministerial conference round at Buenos Aires. India’s stand has been that a permanent solution to the food stockpiling issue was a must and that the conference would be a failure without it, indeed jeopardising the credibility of the WTO itself as an institution.

America, however, has rejected any permanent solution and blocked a proposal from India and South Africa that would include in the declaration a promise to resolve unresolved issues from previous rounds.

In New Delhi, a Commerce ministry statement said, “Due to divergences among members,
and a few members not supporting acknowledgement and reiteration of key underlying principles guiding the WTO and various agreed mandates, ministers could not arrive at an agreed ministerial declaration,” and settled for a non-binding statement.

These key underlying principles, according to India, include “multilateralism, rule-based consensual decision-making, an independent and credible dispute resolution and appellate process, the centrality of development, which underlines the Doha Development Agenda (DDA) and special and differential treatment for all developing countries.”

Questioning legitimacy

The sub-text of the collapse of talks at the WTO obviously regards the US intransigence about multilateral agreements affecting the vast majority of countries, particularly in the developing world, coming, as it has, close on the heels of the Trump administration pulling out of the Paris Agreement on climate change.

The US line seems to be that China and India ought not to be considered developing countries given the size of their economies and the impact they have on issues such as trade and climate. India, however, argues that while it is a large economy, a large section of its population lives below the poverty line and therefore differential treatment is warranted.

America seems to be questioning the very legitimacy of international organisations, as it recently pulled out of UNESCO, accusing it of an anti-Israel bias, and questioned the decision-making capacity of the WTO. Also, it blocked the nomination of judges to the appellate body, thus creating a paralysis in the dispute settlement system of the organisation.

This trend is worrisome as it undermines the very credibility of multilateral organisations that are crucial to human progress, particularly for much of the developing world, which often bears the brunt of US policy.

The deadlock also seems to be permanent, at least until a new American president, who is more amenable to diplomacy, is sworn in, though even then progress is uncertain with a major party (the Republicans) dead against fair deals and compromises, even to the extent of denying the effects of human activity in climate change.

Indeed, without naming the US, a commerce ministry statement on Tuesday said, India is “surprised and deeply disappointed” that despite an overwhelming majority of members reiterating for a permanent solution, a major member-country has reneged on a commitment made two years ago to deliver a solution of critical importance for addressing hunger in some of the poorest countries of the world.”

This is a poor reflection on US policy and could reflect a setback, indeed a breakdown, in the functioning of one of the world’s premier multilateral organisations.