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WTO Enters ‘Crunch Time’ Trying to Reach Deals on Food, Vaccines

·4 min read

(Bloomberg) -- Prospects for World Trade Organization deals aimed at resolving some of the global economy’s most pressing but politically thorny issues hung in the balance as the trade body extended by a day its ministerial conference in Geneva.

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Trade ministers on Wednesday were hoping to clinch deals aimed at widening vaccine distribution, boosting food security, reducing fishing subsidies and extending a moratorium on digital-commerce tariffs. So talks will go into Thursday to try to loosen the key sticking points. India, for instance, was refusing to bend on its defense of its domestic fishing industry.

Indian Commerce Minister Piyush Goyal told a meeting of delegates that it wants exceptions on a 20-year negotiation to curb harmful government fishery subsidies, according to a statement on his ministry’s website. He also insisted members water down the WTO’s subsidy rules for government-backed food-purchasing programs aimed at feeding poor citizens, according to a separate statement.

“The Indian delegation has raised everybody’s eyebrows,” Mexican Undersecretary of Foreign Trade Luz Maria de la Mora said in an interview. “You cannot come to a negotiating forum, particularly at this stage, making demands that they brand as non-negotiable.”

Lowered Expectations

The tough stance by one of the world’s largest developing economies is just one example of the difficulty the WTO faces reaching a package of small but symbolically important deals. Failure to do so may cement the view that the WTO is no longer a viable forum to address the shortcomings of international commerce.

“We are getting to the tough spot of the negotiations now,” WTO Spokesman Dan Pruzin said in a press briefing late Tuesday. “The not-so-good news is that we are running out of time. It is crunch time.”

The WTO has operated for more than a quarter century on the basis of consensus decision-making -- meaning any one member’s veto can scuttle agreements. That model, critics say, is also why it’s been largely ineffective as a deal-making forum for much of the past decade.

The world’s top trade officials are now mulling the prospect of a more polarized era of trade relations where multilateral deals become a relic and like-minded nations move forward without the holdouts.

Read More: India Seen as Thwarting G-7 Push to Avert Global Food Crisis

“That should be a concern to India and smaller, poorer countries that rely on the certainty of a rules-based system to benefit from trade,” said Chad Bown, a senior fellow at the Peterson Institute for International Economics.. “They risk that being eroded in ways that we don’t know what a replacement would look like.”

Overtime Negotiations

Prior to Tuesday, many governments were hopeful that a fisheries agreement -- which aims to help prevent overfishing of oceans -- would be the WTO’s first multilateral accord in almost a decade.

But India is seeking broad exemptions for its fishing industry, including a 25-year phase-in period and a 200-nautical-mile exclusion for its artisanal anglers. “We feel that without agreeing to the 25-year transition period, it will be impossible for us to finalize the negotiations, as policy space is essential for the long-term sustainable growth and prosperity of our low-income fishermen,” Goyal said.

“There are countries which are taking some very strong positions -- very far-reaching demands -- which weakens the purpose of this agreement,” European Union Executive Vice President Valdis Dombrovskis told reporters.

Brink of Failure

Another EU official said the fisheries talks looked to be on the brink of failure, but added that some countries may be hiding behind India’s position on this and other controversial issues of the meeting. A spokesman said Goyal was unavailable for comment.

There were also concerns among some delegates that India’s position may jeopardize a pair of broadly supported proposals aimed at alleviating a looming global food crisis and avoid a cascade of international food-export restrictions.

India wants assurances that its so-called public stock-holding program, which buys exclusively from the nation’s farmers and has exported in the past, cannot be challenged at the WTO as illegal.

Key agricultural exporters like the US, Argentina, Australia, Brazil and Canada fundamentally oppose India’s request to stock up unlimited reserves of subsidized crops and then dump them on global markets -- and there doesn’t appear to be much room for compromise.

Vaccine Waiver, E-Commerce

It remains unclear whether India’s position will also sink prospects for a pair of deals to waive IP rights for vaccines and to extend the WTO’s ban on digital duties, but several delegates weren’t yet ready to declare defeat as the discussions wound down on Tuesday.

On the intellectual-property waiver, “there is still work to do but I think there is some optimism that that can be achieved,” Pruzin told reporters. “The others it’s a little bit difficult to say. I think the electronic-commerce moratorium is a challenge.”

Ultimately, any failure to conclude multilateral agreements won’t unravel WTO’s system of rules that govern more than $28 trillion worth of trade flows each year. But it could be the clearest sign yet that the world’s trading partners are redrawing allegiances along geopolitical lines.

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