WTO veto dents Modi’s image

WTO veto dents Modi’s image

WTO veto dents Modi’s image
India’s dogged refusal to ratify the World Trade Organization (WTO) sponsored international trade facilitation agreement (TFA) in order to preserve her right to subsidize food grains has undoubtedly dented Prime Minister Narendra Modi’s image.
After being hailed as India’s first modern leader in decades, Modi’s apparent affinity to the farming community has irked the international business lobby considerably.
The WTO veto is widely construed by the same segment as a disappointing signal to the outside world which considered Modi to be the most reformists of India’s political executives. Indeed, to many Modi-admirers, India’s deliberate sticking to the old pro-farmer tradition is an unnecessary hangover of the Nehruvian era. They earnestly believe that New Delhi is playing a spoiler role is not justified especially when there is a general consensus among WTO member states over simplifying customs procedures to boost the world’s GDP by up to $1 trillion.
WTO’s 160 member-nations, accounting for 96 percent of the $23 trillion world trade, would have benefitted immensely from TFA in the form of 21 million new jobs. By blocking the effort to standardize customs procedures globally, the Modi government has virtually relegated the trade facilitation process to bilateral or regional level, thus making it a localized issue.
Consequently, many countries, particularly low-income ones, will suffer because they are either not part of major regional trade blocs or are too insignificant to be a priority partner for bilateral trade agreements. Moreover, some economists believe that the failure to reach an agreement on a simplified uniform customs procedure will be far-reaching in the sense that it not only affects countries like India but the entire global multilateral trading system.
India, many argue, has dealt a body blow to WTO’s credibility, already diminished by years of bickering and stalled negotiations on complex global trade issues. But the big question is why would India refuse a deal that would lead to an estimated reduction of 13-15 percent in total costs of trade for developing nations?
Surely, the Indian negotiators are well aware that TFA and the food stockholding deal that was agreed upon in Bali last December are intertwined. In fact, there is little scope of extracting additional concessions on subsidization and stockpiling of food grains, above the 10 percent subsidy limit on total production, by playing spoilsport.
New Delhi sincerely believes that the TFA will benefit the industrialized states more than third world countries. The Indian negotiators are also apprehensive that once the customs norms are eased, developed nations would shy away from finding an amicable solution to the food stockpile issue which is crucial for the continuation of India’s ambitious food security program. For once, Prime Minister Modi, who is perceived to be blatantly pro-corporate, has taken the correct stand in the interest of those millions of poor who comprise 30 percent of India’s total population. As rightly pointed out by International Fund for Agriculture Development President Kanayo Nwanze, it certainly does not make sense for any nation, with an obligation to feed 1.2 billion stomachs, to toe the Western nations’ line blindly.
That would be nothing less than sub-serving the commercial interests of the West, accused of implicitly subsidizing the very products developing countries export, at the cost of the domestic consumers. In fact, for those who are conversant with the ruling Bharatiya Janata Party’s (BJP) core economic vision, there is no room for surprise in Modi’s virtual about turn. Notwithstanding the aversion to Nehruvian socialism, BJP’s economic concept is premised on an alternative socio-economic development model “Indonomics,” which renounces both capitalism and socialism in addition to WTO’s free-trade orthodoxy.
From Modi to BJP’s most acceptable public face Atal Bihari Vajpayee, every big and small leader associated with the saffron ideology has espoused the cause of Indonomics better known as Swadeshi in local dialect. Indonomics is all about opposing trade-bullying by rich powers as well as bolstering local manufacturing and renunciation of profiteering in order to consolidate social enablement. Hence, Modi’s extreme stand vis-à-vis food guarantee for the poor is not only in conformity with the ideals of Indonomics but also signals his intent to aggressively counter the West’s tendency to abet trade distortion subtly.

Seema Sengupta is a Kolkata-based journalist and columnist.
Email: [email protected]
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