WTO – historical Trade Facilitation Agreement

28 November 2014 (All India Radio News Analysis)

Dr. Ranjith Mehtha, Director CCI and Arjun Choudry, Senior Economic Journalist

GIST:

Issues surrounding the Agreement & Outcome of the Agreement; Challenges before India

In the Context of India – Food Security Act 2013 –Bound by the law- food to poorest of the poor - Right to Food; UN’s Millennium Development Goal – Eradication of Poverty & Hunger; Background of TFA – cap of 10% of the Farm Output – difficult for country like India – it would not be able to feed the poorest of poor – promised 2/3 population (83Cr) for free food; in G33 – China supported India’s Stand;

TFA – only after Mutual consent of Signatories – Taxation procedure, clearances in the port authority –are simplified - addition of customs duty to food – plight to the needy at minimum cost;

Not only question of Taxation – Bureaucratic hurdle (Red Tapism) need to be removed; Basic need of the Agreement – to safeguard was – to look the food security of 82 Cr people; India spent Rs.1Lakh Cr annually for food security – 62 Mn tonnes of food grain per year;

Base of the price (for 10% Cap) – prices of 1986 & 1988 – but in 30 years – prices of cereals & food grains had jumped up – it violates the foundation of MDM – eradicate poverty & hunger;

Ensure supply at affordable cost – without obstacle across jurisdiction – clear ports - Subjective clearance – TFA;

Consider the figures, India: $12 Bn Subsidy to its 500Mn farmers – whereas- US: $120Bn Subsidy to its 2 Mn farmers; the basic concept cannot be compared;

Concerns of Developed countries: that Developing grain – hoarding food grains – future may dump in the International market; this can be controlled by proper mechanism – in the age of digitalization; dumping of food grains at low cost might affect the market;

Challenge before India: implementing Food Subsidy

Direct Benefit Transfer (DBT) program – Subsidy to the Bank account – Hoarding/ Dumping can be prevented; Indian Govt. Cannot compromise with the Food Security of the Millions of poor;

WTO Dispute settlement mechanism Procedure – Adopted in India

India – Proposal – settlement of dispute – grievance settlement through the mechanism; General council meet of WTO; meet to be held in 2015 – for settlement of the issue;

Global Reference Prices

1. Objective of the Developing countries – basic concern is to feed poorest of the poor;

Indian way – target of Beneficiary – food security

UIDAI – DBT – PMJDY- Financial Inclusion- Transfer of subsidy in their Bank account; Easy to have checks & balance; proper mechanism should be adopted to monitor the functioning of the Scheme;

 Actual Supply of the Food grain? Mobilization of Resources?

Govt. should rely on the System driven mechanism for proper implementation of the scheme, rather than people driven;

Finding Principle Beneficiary – Electorate – financial burden – so Fiscal Deficit? Effect on the Economy? Also affecting Flexibility provided by the fall in oil prices?

Commerce Industrial Minister of India – Role in the Agreement – TFA?

Creation of mechanism for the future; if 10% cap followed by all developing countries - $1 Tn of GDP (Gross Domestic Product) to Global Economy – will create around 20 Mn Jobs; but ultimately it would affect the food security of the poorest of the poor;