Bridges Daily Update #3 | Food Stock Subsidies to “Make or Break” Bali Trade Talks

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India’s push to permanently protect its subsidised food stock purchases from WTO farm subsidy rules could “make or break” the trade body’s ninth ministerial conference in Bali, sources said on Wednesday.

Facing intense domestic pressure to negotiate a permanent safe haven for the country’s subsidised food stock purchases, the Indian commerce minister, Anand Sharma, told fellow ministers during Wednesday morning’s plenary session that food security was “non-negotiable” for New Delhi.

“The due restraint provision in its current form cannot be accepted,” the Indian commerce minister continued, in what marked his first formal statement at the trade conference. “It must remain in force until we reach a negotiated permanent solution and receive adequate protection from all kinds of challenge.”

While focusing on the public stockholding topic, Sharma also highlighted trade facilitation as another area where his country still has some concerns.

Room to bargain?

Despite the public stance, later on Wednesday India gave hints of a more conciliatory approach in a private meeting open to heads of delegations, indicating it would be open to continue discussing the subject in consultations.

However, Sharma noted, India is not alone in wanting a permanent solution on food stockholding. Sources confirm that some other developing countries have rallied around the idea, including South Africa.

Ultimately, reaching a compromise will require finding terms that both the US and India can swallow, sources told Bridges.

“The US will not accept a permanent distortion of agricultural trade,” one African delegate said.

A clear end date

During Wednesday afternoon’s informal meetings, the EU similarly stressed that while food security is a key topic, a clear end date for the proposed “peace clause” must be included in any final Bali text. Interim solutions, the EU said, can allow the space for members to develop permanent solutions – such as the one India seeks.

China concurred that in four years – or some other time period acceptable to all – it should be possible to reach a permanent solution on the food stocks issue.

Speculating about possible solutions, one official suggested that a push by developing countries could be more effective than one by developed countries. After all, another source noted, India is not just “any country: it can really take pressure.”

Generally, officials say, finding a solution that the key players are willing to accept is going to prove very difficult, especially with the limited time remaining.

Sombre mood

However, many negotiators remain deeply concerned about the chances of a breakthrough in the final two days of the conference.

“I hope by the end of this week, when we speak of Bali, it will be synonymous with a successful outcome,” EU Trade Commissioner Karel De Gucht told reporters. Instead, he continued, “I fear the opposite is true – the storm clouds of failure are right above us.”

“I am an optimist by nature but today I must admit I am in a sombre mood,” De Gucht continued.

Others similarly noted a darker tone among some delegations at the conference venue. “You come to Bali to make a compromise, not to block the negotiations,” one African delegate said.

In the corridors, one developed country delegate indicated that it would be difficult to find landing zones after India’s firm declaration.

Others suggested, however, that maybe negotiators just needed to “give it some more time.”

Trade facilitation, “balance” questions linger

In the meantime, officials say, other pressing Bali topics – such as the remaining issues in the trade facilitation draft text – appear to have been put on the back burner until the stalemate over food stockholding rules is resolved.

“It doesn’t make sense to struggle” on trade facilitation until the peace clause issue is worked out, one source said. “We probably will not see anything on that until we know the rest.”

Some members, such as Argentina, Cuba, and Bolivia, have also reportedly raised questions about the balance seen in the whole Bali package, particularly in the trade facilitation draft text.

A trade facilitation agreement is widely seen as the centrepiece of the proposed Bali package, with high-level officials continuing their calls on Wednesday for WTO members to clinch a deal in Bali.

“A deal on trade facilitation should be a low-hanging fruit to benefit millions of people all around the world,” former UN Secretary-General and Chair of the Africa Progress Panel Kofi Annan said in a statement.

“I therefore urge all nations to make every effort to reach an agreement on the facilitation of trade at the meeting in Bali this week,” he added, stressing also that a Bali package is the “best hope” the world has for keeping global trade discussions alive.

The coming hours

In his statement to members, the Director-General said that he still believes a solution is possible, even with the current difficulties.

Sources say that the vast majority of members encouraged the Director-General to continue his efforts toward concluding a package by the time the ministerial gavels to a close on Friday, and to talk specifically to those members who have special and pressing issues.

Some urged Azevêdo to put forward a text that could serve as a basis for convergence.

What exactly is coming next, many say, continues to be unclear. Along with the consultations that the Director-General will be holding with individual members – which sources say were going on late into Wednesday evening – various bilateral meetings are reportedly being held on the sidelines.

Given the situation, Azevêdo told members, they should expect to be on call, for meetings at short notice, until the conference ends.

Should a deal be reached, the Director-General suggested that the final ministerial outcome document would be a brief declaration representing ministers’ decisions, following by a short, substantive concluding section on post-Bali work, including how to resolve the rest of the Doha Round issues.

Some members have reportedly urged that this post-Bali language include concrete negotiating deadlines and clear guidance, rather than vague declarations on the importance of the 12-year round.

Now or never

Despite a sense from most members that this ministerial is the last opportunity to pass this deal, a handful reportedly suggested during today’s informal meetings that negotiations could instead be finished back in Geneva.

However, one official questioned whether it was feasible to expect that members could make progress in Geneva in the absence of a deal in Bali.

“[Azevêdo] has said it’s now or never,” the source said.

US Trade Representative Michael Froman also told the plenary meeting that members should not try to “sugarcoat reality.”

Failure to agree a deal in Bali would deal a “debilitating blow” to the WTO, he warned, which would be felt most heavily “by those that can least afford it.”

Yemen is “open for business”

On a less sombre note, trade ministers took time Wednesday evening to formally welcome Yemen into their ranks, thirteen years after Sana’a submitted its initial request for accession.

Once Yemen ratifies its accession terms, it will become the organisation’s 160th member, along with being the seventh LDC to join the WTO since 1995. Eight other LDCs are currently negotiating to join the trade body.

Sources stressed that the withdrawal of Ukraine’s veto on Yemen’s terms for membership was key in enabling the latter to join the WTO.

“Yemen is open for business,” said the country’s trade minister, Sa’aduddin Bin Taleb, during the accession ceremony.

Yemen’s exports are primarily limited to two commodities: oil and gas. These products do not face market access difficulties of their own, according to Nagib Hamim, who serves as the economic attaché for WTO affairs at the Yemeni mission in Geneva. Rather, the real gains for Sana’a will be in benefitting from international trade rules and in being able to attract new investment.

Welcoming Yemen into the group, Nepal on behalf of the LDC Group and Egypt for the Arab Group both noted that joining the WTO needs to become a less difficult process for the world’s poorest countries.

Other LDCs echoed that sentiment during today’s ceremony, citing frequent and often “maverick” demands from some of their trading partners during their accession bids.

The WTO’s guidelines for facilitating the accession of poorer countries were revised last year, following up on a decision made at the 2011 ministerial in Geneva. The revised LDC guidelines include, for instance, market access benchmarks on goods, along with provisions on transparency, special and differential treatment, and technical assistance.

ICTSD reporting.