Economics · International Affairs

India & the Bali Package

The recently concluded Ninth Ministerial Conference of the World Trade Organization (WTO) was a thumping success in the face of numerous hurdles that the WTO faced since its inception in 1995. The historic five draft decision declaration was adopted on 7th of December, 2013 and a package of issues designed to streamline trade, allow developing countries more options for providing food security, boost least developed countries’ trade and help development more generally were adopted. The deal, which was deliberated upon for a period of 4 days, is the first ever successful agreement by the WTO.

 The conference saw Indian Minister for Commerce & Trade, Mr. Anand Sharma take a strong stand to protect the food security of Indian citizens. The initial proposed deal would have ruled out governments supporting more than 10 per cent of their agricultural production, but would allow an exemption period of four years for developing countries. India has said the exemption should not be time limited.

In his plenary address at the conference, Mr. Anand Sharma stated in clear terms that food security for Indians was non-negotiable and the WTO needs to amend its outdated rules in order to promote mutual benefits for all countries. He emphasized that, “A trade agreement must be in harmony with our shared commitments of eliminating hunger and ensuring the right to food. These are an integral part of the Millennium Development Goals.”

The Food Security Act, 2013:

In a bid to uplift the impoverished state of our country, the parliament passed a comprehensive National Food Security Act, in 2013. This was considered to be a step forward in improving living conditions for a sizable number of Indian citizens who are struggling for subsistence income.  The prime advantage of this Act is that it seeks to expand the scope of the beneficiaries to cover roughly 67% of India’s 1.2 Billion strong populations.

This ambitious programme requires a huge food subsidy to implement its provisions. The government will provide close to 62 million tonnes of food grains in a year under this Bill, with a subsidy of around $23 billion. This will push the food subsidy from 0.8% of GDP (gross domestic product) to about 1.1% of GDP.

The Bali Package:

The final deal was agreed upon and adopted on the 7th of December, 2013. The benefits of the “Bali Package”, as the deal is called, are twofold. Firstly, its agreement on food security has given a great deal of support to the subsistence farmers in developing countries. And secondly, the deal on multilateral trade facilitation gives an impetus to increased cooperation and efficiency to international trade. The Bali Package is a selection of issues from the broader Doha Round negotiations.

The new deal allows India and other developing countries to continue offering food subsidies to its citizens after the continuous efforts of the Indian delegation headed by Mr. Anand Sharma along with other countries whose interests were affected by this clause which put a cap of 10% on subsidies.

India is particularly happy with the outcome since the provisions of the deal will help Indian traders reduce transaction costs considerably as the maximum losses incurred by them are at customs and ports.

Some of the other key benefits for India include:

 – Food Security Law may push India’s minimum support prices above WTO limits, but interim mechanism provides safeguards till WTO rules are corrected. The poor farmers across all developing countries get safeguards against WTO rules.

– The trade agreement will give a boost to India’s exports.

– India received international recognition for its efforts in correcting a crucial poor-rich country imbalance on a multilateral forum.

This deal has revived the long struggling WTO on many issues of multilateral trade agreements. The most significant for global commerce is the trade facilitation part of the package, which is about cutting red tape and speeding up port clearances. The focus on promotion of trade activities in Least Developed Nations and an agreement to reduce the costs of international trading have been the hallmarks of the Bali Package. But the real challenge will be the implementation of this agreement and reaching upon a more permanent solution to the agriculture and food security issue once the interim provisions expire.

An apt conclusion to this piece is a quote by the Director General of the WTO Roberto Azevedo, who said “We have put the world back into the WTO,” at the closing ceremony after the adoption of the Bali Package.

You can read details of the Bali Package here

About the Author

riddhimaRiddhima Sharma

A patriot and hopeful change maker, Riddhima is a believer in the power of women to change the world. She has studied Political Science with special reference to the feminist movement, feminist theory and the position of women in Indian politics. She is currently pursuing Law and hopes to specialize in women related laws and work with an organization in a related field. She enjoys public speaking and is not afraid to speak her mind. Sharma is a quick learner and is keen to gain new experiences especially in the areas of public policy, politics and strategy.

One thought on “India & the Bali Package

  1. The last sentence of the penultimate paragraph is very very important and assumes even more significance given the history of WTO. The deal is only a breather and what the DG said, “We have put the world back into the WTO” is very demeaning as it shows how he (the developed world) considers the WTO above all.

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