Bridges Daily Update #4 | “Peace Clause” Controversy Pushes Bali Deal Into Eleventh Hour

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Ministerial negotiations on a “small package” of trade measures were teetering on the brink of collapse late on Thursday, as controversy over proposed reforms to the trade body’s rules on farm subsidies for food stockpiling pushed the talks late into the night.

The burgeoning row over the food stocks proposal has stolen the scene at the WTO’s ninth ministerial conference, where members have been aiming to sign off on a pact that would also include an agreement on trade facilitation, together with a few other select agricultural issues and development-related components.

Spearheaded by India, the G-33 group of developing countries had proposed that current farm subsidy rules be relaxed to allow governments more scope to buy food at administered prices as part of their food stockholding schemes.

Although members had negotiated a draft deal in Geneva that would commit countries to refrain from bringing legal disputes in this area, Indian commerce minister Anand Sharma today went a step further by calling for a permanent solution to be agreed immediately.

“There is no dictionary… that describes interim as temporary,” Sharma said on Thursday. For New Delhi, he said, an “interim solution” is one that lasts until a permanent one is put in place.

The US, and other members concerned about the possible impact on farmers outside India, had previously indicated that they could accept an interim “peace clause” with a set end-date, while countries negotiated a permanent solution.

They were nonetheless unwilling to commit to an open-ended opt-out from developing countries’ current farm subsidy commitments.

Geopolitical fault lines shifting

Speaking to a packed room of reporters, delegates, and civil society representatives on Thursday morning, Indian commerce minister Anand Sharma gave a strong public defense of his country’s position.

Countries that spoke up in support of India “account for more than two-thirds of the poor population of the world,” Sharma said.

However, only a few hours later several negotiators told Bridges that the G-33 – including China – were no longer effectively collaborating around a common position. “There is no G-33 any more… India has left and joined ALBA,” said one trade official associated with the bloc, only half-jokingly.

The ALBA countries – an alliance which includes Bolivia, Cuba and Venezuela – has taken a stronger stance in support of more flexibility for countries with food-stockholding schemes, even though only India is believed to be at risk in practice of breaching its WTO ceilings.

South Africa and Kenya were reported to be sympathetic to the Indian stance. Sources told Bridges that cracks within the African Group had emerged on Wednesday over whether the rest of the members would back the South African position.

In the hours that followed, however, some of the group’s members began to move away from South Africa.

“African countries don’t always talk with the same voice within the Group,” one of its members commented.

Pakistan, which has long opposed greater flexibility on countries’ food stockpiling schemes, also spoke out against India’s position.

Aisha Moriani, a member of the Pakistani delegation who spoke in plenary on behalf of her minister, said that “market price support, which is basically the focus of the interim solution, is not a win-win solution on food security.”

Similar remarks were heard at panels and in the hallways of the ICTSD Trade and Development Symposium, which was held across the street from the MC9 venue. [Editor's note: ICTSD is the publisher of Bridges.] Experts and others dicussed how the WTO allows food security subsidy schemes that provide direct support to consumers or were otherwise delinked from production. “The issue discussed in Bali,” one observer said, “is not food security, rather the distorting nature of the instrument chosen.”

Leaders at odds

Sources also revealed that the President of Indonesia contacted the Prime Minister of India Thursday morning to warn that India’s position currently threatens a Bali deal. India’s response was that they expected Indonesia’s support as a fellow G-33 member.

“It is better to have no agreement than to have a bad agreement,” Sharma told reporters on Thursday morning, while stressing that India did not come to Bali with the intention of “collapsing” the ministerial and was still hoping for an outcome.

Other developing country proponents of greater flexibility on food stocks did however question why India’s trade minister had been unwilling to accept a draft accord which the country had previously supported in talks only a few weeks beforehand in Geneva.

Sharma nonetheless insisted that, if the conference ends on Friday without a deal, “those who are speaking up for the poor and hungry people cannot be blamed.”

One source said that the US had indicated privately that it may have some – limited – flexibility to move towards the Indian position, while being “categorically against” a permanent carve-out.

Generally, officials say, whether the ongoing talks yield a deal will depend largely on whether Froman and Sharma can find common ground.

“The solution lies in between the US and India,” one African ambassador said.

Drafting of text

Sources report that in one meeting with Azevedo, India was presented with three different options that it could pursue. Sharma nonetheless left that meeting without an agreement, they said.

Options under review included: the draft text that had been negotiated in Geneva; an option linking more directly the interim mechanism with a permanent solution; and an “opt-out” clause giving special treatment to India – which delegates said was unlikely to find favour either with developed countries or with other G-33 members.

The Director-General had also been asked to explore possible options for revised draft texts that could provide a basis for consensus, and has been meeting individually with various members on the subject. The trade facilitation text is essentially clean, multiple sources said, with the few remaining issues likely to disappear should the food stocks debate be resolved.

Time running out

As Bridges went to press well in the early hours of Friday morning, no formal announcements had been made over whether consultations were approaching success or failure.

However, Azevedo was reportedly continuing his meetings with the US and India in a bid to resolve the stalemate. Sources say that consultations were expected to continue throughout the night.

Friday is set to be the last day of the ministerial conference, leaving ministers precious little time to rescue the Bali package before officials disperse for other commitments, such as the Trans-Pacific Partnership ministerial in Singapore this weekend. Delegates say that an informal Heads of Delegation meeting is likely early Friday morning.

“Right now the peace clause is creating more fight than peace,” one African delegate commented to Bridges.

However, another official said that “it’s not over yet,” though several acknowledged that the situation is looking bleak. “Things are moving,” one high-level official noted, with many expecting the closing day of the conference to be a long one.

ICTSD reporting.