India Rejects WTO Agreement

Just last week, the World Trade Organization seemed like it was going to pass the Trade Facilitation Agreement (TFA) when India decided not to sign the deal, citing concerns over food security. The TFA was the WTO's first landmark trade agreement, designed to ease and liberalize trade between its over 160 member countries by changing tariff and duty systems, as well as cutting down on red tape. These trade revolutions, it claimed, would have created over 20 million jobs and added $1 trillion in trade output. The idea for the deal was born during the WTO's conference in Indonesia last winter, and the deadline for agreement and signing the deal by its member countries was on July 31 of this year. With India backing out of the deal, however, it seems as though the TFA has been doomed to oblivion....or has it?

India decided not to sign the TFA because of its food security act. This law allows India's government to buy grains from farmers in prices that are higher than the market and then give these grains to many of India's poorer citizens. The TFA has a provision that limits subsidies such as these to only 10 percent of agricultural production value. Since the grains that India's government buys and distributes under the act are at weighty levels, India would come under violation of this rule under the TFA and would have to cut back on its food security. This is something that the country does not wish to do. This is not a new issue either; India brought this up while the original TFA idea was being entertained at the WTO's winter conference. Several alternative solutions were thought of, but none have seemed to come to fruition or satisfied the Indian government.

As a result, the TFA has not been signed by India and has not been approved, in spite of agreement upon it by the majority of the other WTO member nations. Cuba, Venezuela, and Bolivia have supported India on this policy, but other nations have attacked India for its stance. Many are saying that this move is a major blow to free commerce, and that trade relations will take a serious hit. The WTO, which established itself in 1995 as a mediator and innovator for global trade among its member countries, is now facing a doubtful world that wonders if it can achieve the goals it wished to do. After all, the TFA was supposed to be the organization's first landmark deal. Many countries, including the United States, are claiming that the death of this deal will lead to a shaky future for global trade talks, as well as a decline in the power and authority of the WTO. Not to mention that the death of this deal will take away much from the global economy and an uncertain path for international trade.

However, India claims that the deal is not dead, and that it is still willing to work out negotiations. Trade officials of the country say that as long as their concerns over food security are met, then they are more than willing to sign and approve the TFA. They are looking that the WTO should call another meeting in September and work out an agreement in this aspect. If this is the case, then the future of the WTO and TFA does not look so bleak after all. Do you think that a deal can be worked out and that the TFA will ever be passed?