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Why Suresh Prabhu is walking a tightrope at his first WTO ministerial conference

Suresh Prabhu at his first ministerial of WTO has an uphill task of safeguarding the interests of farmers as well as of e-commerce players.

twitter-logoAnilesh S Mahajan | February 3, 2018 | Updated 18:16 IST
Why Suresh Prabhu is walking a tightrope at his first WTO ministerial conference
Commerce minister Suresh Prabhu

On December 10, when India's commerce minister Suresh Prabhu will join the negotiators at four day 11th edition of ministerial conference of World Trade Organization, or WTO, at Buenos Aires in Argentina, he will be expected to do, what he does best; negotiations. This time his task is much tougher, especially with a legacy of disastrous Bali round in 2013 and relatively below average last round at Kenya's capital Nairobi, a status quo will be seen as accomplishment.

Before joining the NDA government, Prabhu was PM Narendra Modi's personal emissary to G20, and prior to that he worked as chairperson of Council on Energy, Environment and Water (CEEW), and a member of the Global Advisory Council of the World Economic Forum and remained active in tier-2 discussions. At Buenos Aires, he will not only have to safeguard the interests of Indian farmers, but this time, he will have to put his foot down on blocking introduction of new issues, such as, e-commerce. Unfortunately, the Indian trade negotiators could not achieve a permanent solution to the issues related to public stockholdings for food security and domestic support for agriculture. & this will make Prabhu to work harder on the negotiating table.

India had not so great last edition, where Prabhu's predecessor Nirmala Sithraman had to sweat hard to get extension of another two years to come up with the permanent solution replacing the embargo under peace clause on issues related to public stockholdings for food security purpose and domestic support to agriculture.

In 2015, at the last edition of the ministerial conference at Nairobi, the when trade ministers of five countries-India, the US, European Union (EU), Brazil, and China-sat separately and negotiated the final outcome of discussions, the duo of India and China were bulldozed by troika of EU, the US and Brazil.

The trio convinced the two Asian countries to let go the critical components of agenda set in Doha back in 2001, which promised emerging and poor countries of developmental outcomes in lieu of their integration into the global trade. But western countries were also allowed to open up doors for taking up of the new issues, before closure of the debate on Doha round. In last two years, the development agenda is dying a natural death.

Meanwhile, at ecommerce, Prabhu is poised to take nuanced position, that the digital trade is a good for development but since the industry in India is evolutionary stage, it is not correct to start the negotiations at this moment. But will he be able to maintain the stance, while negotiating farmers' issue with western world; only time will tell.

Farmers' play
Back home, the farmers are already battling with the issues related to increase in the input cost and reducing margins along with shrinking size of the fields. Prabhu is under immense pressure to not concede any ground further at WTO. EU led developed countries are putting pressure on limiting the subsidies government to 10 percent of GDP of agriculture. India is constantly disputing the way these subsidies are been calculated, along with the Aggregate Measurement of Support, or AMS extended by the US and EU as food aid. "It doesn't make any sense to accept the food procurement price to stay below the external reference price-which is determined in 1986-88. Since then the food prices have increased many fold," explained Tajamul Haque, former chairman of Commission of Agricultural Cost & Prices. For example, in 2016/17 the minimum support price, or MSP for wheat in India was at $226 per tonne (Rs 1550 a quintal), whereas if we link it with ERP it had to be $130 for the same quantity. "This 'artificially' inflates subsidy figures." This is been stonewalled by the western world.

National Co-convenor of RSS's economic think tank Swadeshi Jagran Manch, Ashwani Mahajan added, the western world need to understand that India is not giving subsides to distort the trade, but to safeguard poor farmers. Since India, along with other developing countries, couldn't achieve permanent solution, Prabhu will not have any other option but to seek an extension to the peace clause till the time permanent solution is not achieved.

New Age Debate
Post exit of Amazon and Uber from China and subsequent enhanced focus on Indian operations, along with entry of Jack Ma led Alibaba in Indian e-commence space, many are already seeing India as a battle ground for next e-commerce fight of the US and China based players. & there is also space for domestic indigenous players. "India's ecommerce industry is at very nascent stage. The outcome of negotiations at WTO will hamper growth of indigenous players. It is important that the government retains policy space to support the evolution of domestic digital companies," says Ashwani Mahajan, national co-convenor of RSS's economic think tank, Swadeshi Jagran Manch.

To achieve this, Prabhu will have to resist group of Japan, Korea, EU, Singapore, Nigeria, Pakistan, Philippines et al to develop the framework for e-commerce. These countries argue that rules of the game need to formulated to regulate the cross-border flow of data, server localization, IPR, trade facilitation, source code, technology transfer, intellectual property rights, trade facilitation et al. Abhijit Das of Delhi based Centre for WTO Studies, recommends that the time is not right for these negotiations. "Whenever this discussion will start, this will be mother of all discussions happened at WTO in last two decades. This will open up several settled issues related to IPR, tariff & non-tariff, goods movement et al, along with several in discussion including related to services et al," Das said.  

On November 17, at industry lobby group CII's discussion, Commerce secretary Rita Teaotia said that these 'new issues' must be thrashed out only when they reached a sufficient level of maturity, they can be brought to a WTO ministerial. Meanwhile, Pradeep S. Mehta, Secretary General of Jaipur based think tank on trade agreements, CUTS, expects Prabhu to step forward and looking for space to join working group. "India should not miss an opportunity to join deliberations from day one." What works for Prabhu is that the entire Africa block is with India on this issue, and technically consensus is required to take up new issue for discussion.

But nothing stops WTO to constitute working group on this issue.

Trumping US
Along with this, it is yet not clear how the new Donald Trump led establishment will treat many of these negotiations. The Trump regime has not made any efforts to engage on issues related to both permanent solution and on ecommerce. In last one year, the regime moved out of the many other significant multi-laterals like Trans-Pacific Partnership, or TPP, COP21 commitment on environment, North America Free Trade Agrement et al. All this is not only make the US venerable, but also unpredictable.  

 

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