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US and India compromise to give birth to WTO deal

Published Dec 9, 2013

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Jakarta / Bali - The World Trade Organisation (WTO) has agreed to the first major accord in the group’s 18-year history, a pact designed to smooth commerce at borders and safeguard food security programmes in developing nations.

The deal unveiled at the weekend in Bali, Indonesia, was the first multilateral agreement negotiated by the WTO’s 159-member nations. It emerged from talks that had continued through the night after the US and India compromised on food subsidies and a Latin American bloc led by Cuba dropped its earlier opposition to a draft agreement.

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“For [the] first time in our history, the WTO has truly delivered,” said the trade organisation’s director-general, Roberto Azevedo. “We have put the world back into the World Trade Organisation.”

Success in reaching an agreement that supporters say could add $1 trillion (R10.3 trillion) to the world economy may help extend talks on the Doha trade negotiations, which have dragged on for 12 years. A deal at Bali had looked unlikely earlier last week.

India wanted a pact that would satisfy its demands to exempt food security plans from being counted under subsidy spending caps, while the US was concerned that surplus from India’s food programme may get dumped onto world markets.

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The agreement lets India and other developing nations continue to subsidise their crops to bolster food security without having to worry about legal challenges, so long as the practice does not distort trade, according to a draft text.

Indonesian Trade Minister Gita Wirjawan told ministers at a conference that the accord would provide more certainty to business.

“These countries will benefit from increased access to markets,” said Wirjawan, noting that it would make it easier for the least developed countries to export goods.

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Anti-poverty campaign group War on Want said the Bali talks still had not resulted in universal rights to food.

The US and other members of the WTO would retain the right to file a complaint if subsidised goods are sold in global markets and depress prices or harm competitors.

US trade representative Michael Froman hailed the agreement, calling it an important step towards advancing the Doha agenda.

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“The WTO has entered a new era,” Froman said. “WTO members have demonstrated that we can come together as one to set new rules that create economic opportunity and prosperity for our nations and peoples.”

US business groups, including the Business Roundtable and the US Chamber of Commerce, hailed the pact. The Washington-based roundtable’s members include the chief executives of US firms such as Boeing and Microsoft.

This “will provide a solid foundation to re-energise the WTO” and provide momentum to conclude other deals, Caterpillar chief executive Douglas Oberhelman, the chairman of the roundtable’s international engagement committee, said.

Susan Ariel Aaronson, a professor of international affairs who specialises in trade policy at George Washington University in Washington, said the compromise was a trade-off that kept in place protectionist agricultural policies for the sake of the larger trading system.

Public Citizen, a Washington-based consumer advocacy organisation, was skeptical of the effectiveness of an accord, saying the draft included watered-down provisions that simply let the WTO save face after years of stalled talks. – Bloomberg

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