A new disagreement has cropped up that is threatening progress made by the World Trade Organization (WTO) last year.
This past week, India rejected the United States’s proposal to debate further the issue of food security—a rejection related to India’s earlier threat to block the WTO’s Trade Facilitation Agreement. Indian officials interpreted the proposal as a design to place their concerns in the periphery as the Trade Facilitation Agreement’s deadline of July 31 quickly approaches.
By Aug. 1, WTO members must reach a consensus in order to approve a short protocol for the implementation of the trade agreement to continue. Some experts have argued that the agreement could pump as much as $1 trillion into the global economy by facilitating a streamlined trading process across national borders. Others, like Jayati Ghosh, a professor of economics at Jawaharlal Nehru University, have argued that prediction is based on “spurious empirical exercises.”
During a December 2013 meeting in Bali, WTO members agreed to a three-part work program. The trade facilitation agreement was one element. Another was the opening up of markets in developed countries to the Least Developed Countries. The final part — and the point of contention — proposed that developing countries could continue implementing their food security programs for the next four years. The WTO plans to have found a permanent solution to the food security issue by 2017.
India’s representatives took issue with the four-year postponement of action. “You’ve given yourself until 2017, but that doesn’t mean you have to wait to start,” said Nirmala Sitharaman, India’s Commerce Minister, in an interview with the Financial Times. She continued, “We want some very quick, substantive movement on this.”
However, other sources have reported that Indian Commerce Department officials have been demanding a “permanent solution” by the end of the month. These contradictory demands have left the rest of the WTO confused about India’s position. What is clear is that India has felt marginalized and ignored in WTO’s negotiations thus far.
And the country has cause for concern when it comes to agriculture. The agricultural sector employs more than one-half of the country’s workforce, a force that the democratic government must appease to stay in power. When rice prices skyrocketed in 2007-08, India responded with the National Food Security Act of 2013. As a result of this act, India stores grains so that price spikes can be managed by introducing stockpiled supplies into the market. Farmers receive a minimum price for their products, thereby remaining appeased, and the Indian government pays for the difference.
These are controversial methods both within India and abroad. In India, citizens criticize the subsidizing of farmers because the money could be benefiting the development and education of children, or improving the health care system.
Abroad, countries like Thailand and Uruguay have expressed concerns that India distorts the global market and hinders these countries’ own rice markets. Developed countries like the United States have deemed India’s practices contrary to the spirit of a liberalized global market. Many in India have responded by pointing to the subsidy programs of developed countries as evidence of these countries’ hypocrisy.
Joshua Meltzer, a fellow in Global Economy and Development at the Brookings Institution, has argued India misconstrued food security to equal food sovereignty—complete “self-sufficiency in food production.” He suggests this isolationism from international trade will engender greater food insecurity.
Indian officials disagree, and until the WTO finds a solution, the country will continue with its food security policy. Moreover, despite the popular rhetoric praising them, global markets have not always benefited developing countries as they are supposed to in theory. India, like many other developing countries, does not trust these markets. Inevitably, these countries turn inward.
In the long run though, most experts would agree that India cannot improve on its poor Global Hunger Index ranking (65 out of 79) through isolationism from international markets. The country has chosen a critical moment for the WTO in which to voice its concerns, but by doing so, India has threatened the well-being of the same tool — international trade—that might be capable of solving the country’s food insecurity problem.