Days after the Narendra Modi government torpedoed a global trade facilitation agreement (TFA) that some say would have added about USD 1 trillion to the USD 60-trillion global economy, and created 21 million jobs, criticism is coming in from various quarters over both the reasons for and the way in which India scuppered the deal.
The TFA was agreed upon by WTO members at a December 2013 meeting in Bali and laid down procedures to simplify customs procedures, as part of a 10-point deal.
Back then, the erstwhile Indian government gave in to the deal only after it had got an assurance from the global trade body that a special four-year concession on the contentious issue of agriculture subsidies would be allowed for India.
But the new government led by Modi - even as it is not opposed to the TFA agreement per se -- used its veto power and caused the deal to fall through following the expiration of the July 31 ratification deadline, as it demanded a parallel pact on the issue of subsidies be put into effect alongside.
WTO rules allow for a country to provide subsidies only to the tune of 10 percent of its total annual production. But India, which employs about half the country's population in the agriculture sector, provides subsidies worth up to Rs 1.15 lakh crore (FY2015 figures) by buying food stock from farmers at above-market prices.
The idea behind limiting food subsidies is that they distort global trade by allowing farmers to export foodgrains at a cheaper cost to other countries who then resort to erecting trade barriers by increasing import duties on such products.
To be sure, India does not want the 10 percent limit to be relaxed: it only wants the WTO to rebase the calculation -- which is based on 1986 prices -- to account for inflation and currency fluctuation since. (Based on the 1986 benchmark, India's wheat and rice subsidies themselves use up 9 percent of the limit (as reported by DW), and could result in the country incurring large penalties.)
But the eleventh-hour roadblock at the WTO deal has rankled analysts who have questioned both the economic rationale behind India's decision to obstruct what would have been a fruitful deal to rich and poor countries alike as well as the manner in which it was done.
Writing in the Wall Street Journal, policy expert Sadanand Dhume said the government's stance was a defence of the previous Congress government's worst legacies—"the morally bankrupt and fiscally irresponsible food security program that pours billions of dollars into a creaky procurement system notorious for leakage and graft."
Back when the UPA unveiled a massive Rs 60,000-crore Food Security Bill that aimed to provide food to two in every three Indian at below-cost prices, incumbent prime minister Narendra Modi was one of its most vocal opponents, as reported by Mint.
"Instead of protecting this system, a reformist government would have used the Bali deal as an excuse to spur domestic reform," Dhume wrote.
That the 'pro-business' Modi defeated a pact that promoted free trade (even as India still had four years to negotiate a separate deal on subsidy limits) based on what can be considered as "pro-poor" but also "populist" undermines his reformist credentials, analysts say.
"The four years were to give India time to come up with a more economically-defensible system," wrote Greg Rushford of The Rushford Report, who accused the Indian PM of being an "economic nationalist".
"But the four-year exemption was not enough for Mr. Modi, who demands a permanent exemption to subsidize as much as he wants -- and right now, thank you," Rushford added.
If the deal does not go through -- India has expressed hope it could be signed later as well -- it could also add to the discontentment over the lack of WTO's success as a trade-facilitating body and lead countries to strike up their own regional multilateral trade agreements, leaving India out in the process, according to Dhume.
"Should disillusionment grow with the WTO as an impossibly unwieldy organization vulnerable to capricious vetoes, pro-trade countries will likely double down on proposed regional trade agreements such as the Trans-Pacific Partnership," he wrote. "If India is locked out of these blocs, as appears likely, it will undermine its goal of building a manufacturing base by integrating itself into global supply chains."
Some have also hinted at a political angle to the standoff: "Overtly unstated in Geneva, but behind knowledgeable minds is the fact of upcoming elections in several Indian states, including predominantly agricultural ones as Haryana and Maharashtra," wrote Iftekhar Ahmed Chowdhury, Principal Research Fellow at the Institute of South Asian Studies, National University of Singapore.
"Unsurprisingly, Modi wants BJP to win them. This is much easier done with the support of the farmers. The voices of Indian diplomats in the WTO negotiations are music to their ears."
Anda sedang membaca artikel tentang
Criticism piles up for Modi in wake of WTO standoff
Dengan url
http://harmonisem.blogspot.com/2014/08/criticism-piles-up-for-modi-in-wake-of.html
Anda boleh menyebar luaskannya atau mengcopy paste-nya
Criticism piles up for Modi in wake of WTO standoff
namun jangan lupa untuk meletakkan link
Criticism piles up for Modi in wake of WTO standoff
sebagai sumbernya
0 komentar:
Posting Komentar