THE BIG DEAL – WTO Endorses its 1st Trade Deal in 20 years

India Asked by WTO To Remove Export Subsidy on Raw Sugar
  • World Trade Organization members agreed to the first global trade deal in the agency's 20-year history by endorsing a move to roll out easier customs rules
  • Easier cutoms rules give flexibility to developing countries such as India to pay minimum support price to their farmers, without fearing about breaching the prescribed ceiling.
  • Although an official statement was awaited at the time of going to press, Indian government officials confirmed that the proposals have been cleared.
  • In addition, they will finalize a work programme by next July to provide a thrust to multilateral trade agreements that cover all 160 members and will make an attempt to reduce the proliferation of free trade agreements that are being pushed by countries such as the US.
  • The West, which has been pursuing an aggressive FTA agenda, has blamed the lack of progress at WTO to look at other options.
  • The Trade Facilitation Agreement -to ensure easier movement of cargo through customs at ports and airports across the globe -is expected to restore some confidence in WTO.
  • WTO is pursuing the stalled Doha Development Agenda for over 13 years now.
  • Some studies have estimated that the gains from the new agreement may be as high as $1 trillion, although a majority of the gains through higher exports are likely to accrue to the developed countries and large exporters such as China.
  • The deal endorsed by the WTO General Council in Geneva has been in the pipeline for a year but could not go through due to the BJP government's objection to the formula on piling up food stocks, which was agreed in Bali last December.
  • But, now the member countries have agreed to decide on a new formula for calculating the level of food subsidies by next December but avoid any penal action at the WTO until the mechanism is tweaked to address the concerns of developing countries.
  • According to government, current food subsidy formula flawed as the calculation is linked to 1986 prices.