Grain stockpiling | Bali agreement in stalemate as India holds out for concessions on stores
NEW ORLEANS, La. — Little progress is being made on the world’s most influential agricultural trade agreement, says a policy analyst.
After 12 long years, the 160 members of the World Trade Organization finally came to an agreement on a trade deal in Bali, Indonesia, in December.
However, no progress has been made to implement that deal because of one country — India, said Gary Blumenthal, president of World Perspectives.
The plan coming out of Bali was to hash out a trade facilitation agreement followed by a food security agreement.
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The July deadline for the trade facilitation agreement came and went because India wouldn’t allow the agreement to move forward.
“India realized that it might not get what it wants on food security, which is everybody saying, ‘sure, stockpile all the food you want,’ ” said Blumenthal during an interview at the 2014 Oilseed & Grain Trade Summit.
“They are pretty much alone on this, but they are steadfast. They do not appear willing to budge at all.”
Exporting nations are not prepared to grant India what it wants. History shows stockpiles tend to build to a point where the grain starts to go bad and then it is suddenly sold abroad at cheap prices.
“It’s pretty clear to anybody who works in grain markets that it will be dumped, disrupting everybody else’s exports,” said Blumenthal.
The United States and the European Union have responded to India’s intransigence on the stockpiling issue by threatening to not move forward on a separate agreement on the international trade in services.
“Things are really stalemated in Geneva right now,” he said.
It is estimated that a WTO deal would deliver a $1 trillion benefit to the world economy, which dwarfs the value of any other trade agreement. For example, the Trans-Pacific Partnership is expected to have a value of $300 billion.
No new timeline has been set for reaching a deal on the trade facilitation agreement, and neither side appears willing to budge.
“They just continue to demagogue each other in Geneva. There’s a reason why it’s called the General Agreement to Talk and Talk,” said Blumenthal, jokingly referring to the General Agreement on Tariffs and Trade (GATT), which was the precursor to the WTO.
He has no idea whether a solution can be found to the most recent WTO impasse.
“India will have to be given something, but they’re not going to get all that they want because the rich countries are saying, ‘no way.’ ”
Blumenthal believes the structure of the WTO needs to change.
It was possible to reach a consensus when the organization was dominated by the 24 members of the Organization for Economic Co-operation and Development (OECD), but that is proving exceedingly difficult now that there are 160 members.
“It’s too diverse and complex now. It worked fine when it was 24 OECD members (calling) all the shots,” he said.
In those days, the rich countries would make an agreement among themselves and share the benefits with the poor countries without making them pay anything because they had nothing to offer.
That is not the case anymore. Emerging markets such as Brazil, India, Russia and China have plenty to offer.
“They have something to give, but they were getting it free for so long they don’t know why they have to give now,” said Blumenthal.
“So that’s the problem. It’s a mental hurdle for them to think they have to give anything but meanwhile they’re eating our cake.”
Blumenthal said the WTO still serves a purpose despite its inability to implement a global trade pact.
“The WTO continues to serve a very important function for dispute settlement as a place for existing rules and their enforcement. That’s very valuable,” he said.
