The United States diplomatic corps appears to be on overdrive at the moment. On Wednesday, the US announced that it had reached a landmark deal with China to cut back significantly on carbon emissions, in a manner that will pressure the rest of the world to follow suit. The next day, after “intensive” discussions between New Delhi and Washington, both nations announced that India will not be getting in the way of the World Trade Organisation’s Bali Package, aimed at streamlining global trade.
India’s decision to stop obstructing the implementation of the Bali Package’s trade facilitation agreement actually counts as a victory for Narendra Modi. The new government decided early on in its tenure that it would not be going ahead with the trade facilitation agreement, even though the previous administration had made a commitment to do so.
This naturally earned the country plenty of flak, with some saying India was being too selfish in its approach while others were prepared to go ahead with the package. (Because the WTO makes decisions based on consensus, this included every country that had signed up except for India.) Despite all this, New Delhi remained strong and refused to budge.
Bali packaging
Now, it appears that this tactic appears to have extracted more favourable conditions from the Americans.
The Bali Package trade facilitation deal was meant to be a legally binding commitment to simplify and standardise port procedures, with the benefits of such a move most likely to accrue to smaller countries. Modi’s government realised that since India was not going to benefit tremendously from it, other WTO issues would have to be settled first. So New Delhi decided to say it would not sign the trade facilitation pact unless there were guarantees that its food security programme would not be derailed.
India’s food security programme is expected to easily overshoot the stated WTO limit that permits countries to subsidise only 10% of overall agricultural production. New Delhi disagrees with the way the WTO measures these numbers, but nevertheless called for its own food security programme to be safe from prosecution by any other countries that believe India has overshot that limit. During the Bali Package discussions in 2013, when India under the previous administration agreed to come on board, the countries had agreed to a four-year “peace clause” during which no other country could legally challenge India over its subsidies.
After the Modi government’s more aggressive stance from earlier this year, it appears that this peace clause will now be indefinite. At least until a “permanent solution” to the food security has been arrived at, no other country will be able to challenge India over its subsidies for the moment. A time-limited peace clause was always problematic, because, unlike the trade facilitation deal, it wouldn’t have been legally binding on other countries. But making it indefinite, that too after such a show of aggression from India, sends a clear message to other countries about how seriously India takes its food security programme.
It remains to be seen whether India can convince the WTO to eventually put its food security programme into a “green box,” where it would be completely legal rather than just permissible. Until then, though, India has made it clear that it will not automatically fall in line with global opinions, no matter where the pressure is coming from.
Changing climate
Having just won that battle, India is about to step into an even larger one.
The US has, for years, argued that developing countries, especially the largest economies like India and China, should be doing more to fight climate change. Making the argument that their people need the basics first before their governments could focus on climate change, both India and China had taken the lead in keeping any mandatory emissions reductions at bay.
That’s no longer true. The pact announced yesterday saw China agree to begin cutting down on its greenhouse gas emissions after 2030, while also reducing its dependence on fossil fuels. For the world’s largest emitter of carbon dioxide and a country that still needs a lot of fuel to grow, those commitments are significant.
They also mean that the Indo-China partnership on this matter is over. India will now be under much more pressure to fall in line and commit to a target for emissions reductions, even though it pollutes much less than either China or the US. New Delhi has long argued that the developed world, which polluted for much longer particularly during the years when it needed a lot of often dirty fuel to grow, cannot now expect developing nations to cut back while they are still growing.
The Modi government has already shown a tendency to ignore environmental concerns in favour of industrial clearances, so that India’s sluggish growth can once again be revived. As the leaders of the G-20 group of major economies meets in Australia this week, Modi’s commitment to this approach, rather than the low-carbon one that China has embraced, will be tested.
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India’s decision to stop obstructing the implementation of the Bali Package’s trade facilitation agreement actually counts as a victory for Narendra Modi. The new government decided early on in its tenure that it would not be going ahead with the trade facilitation agreement, even though the previous administration had made a commitment to do so.
This naturally earned the country plenty of flak, with some saying India was being too selfish in its approach while others were prepared to go ahead with the package. (Because the WTO makes decisions based on consensus, this included every country that had signed up except for India.) Despite all this, New Delhi remained strong and refused to budge.
Bali packaging
Now, it appears that this tactic appears to have extracted more favourable conditions from the Americans.
The Bali Package trade facilitation deal was meant to be a legally binding commitment to simplify and standardise port procedures, with the benefits of such a move most likely to accrue to smaller countries. Modi’s government realised that since India was not going to benefit tremendously from it, other WTO issues would have to be settled first. So New Delhi decided to say it would not sign the trade facilitation pact unless there were guarantees that its food security programme would not be derailed.
India’s food security programme is expected to easily overshoot the stated WTO limit that permits countries to subsidise only 10% of overall agricultural production. New Delhi disagrees with the way the WTO measures these numbers, but nevertheless called for its own food security programme to be safe from prosecution by any other countries that believe India has overshot that limit. During the Bali Package discussions in 2013, when India under the previous administration agreed to come on board, the countries had agreed to a four-year “peace clause” during which no other country could legally challenge India over its subsidies.
After the Modi government’s more aggressive stance from earlier this year, it appears that this peace clause will now be indefinite. At least until a “permanent solution” to the food security has been arrived at, no other country will be able to challenge India over its subsidies for the moment. A time-limited peace clause was always problematic, because, unlike the trade facilitation deal, it wouldn’t have been legally binding on other countries. But making it indefinite, that too after such a show of aggression from India, sends a clear message to other countries about how seriously India takes its food security programme.
It remains to be seen whether India can convince the WTO to eventually put its food security programme into a “green box,” where it would be completely legal rather than just permissible. Until then, though, India has made it clear that it will not automatically fall in line with global opinions, no matter where the pressure is coming from.
Changing climate
Having just won that battle, India is about to step into an even larger one.
The US has, for years, argued that developing countries, especially the largest economies like India and China, should be doing more to fight climate change. Making the argument that their people need the basics first before their governments could focus on climate change, both India and China had taken the lead in keeping any mandatory emissions reductions at bay.
That’s no longer true. The pact announced yesterday saw China agree to begin cutting down on its greenhouse gas emissions after 2030, while also reducing its dependence on fossil fuels. For the world’s largest emitter of carbon dioxide and a country that still needs a lot of fuel to grow, those commitments are significant.
They also mean that the Indo-China partnership on this matter is over. India will now be under much more pressure to fall in line and commit to a target for emissions reductions, even though it pollutes much less than either China or the US. New Delhi has long argued that the developed world, which polluted for much longer particularly during the years when it needed a lot of often dirty fuel to grow, cannot now expect developing nations to cut back while they are still growing.
The Modi government has already shown a tendency to ignore environmental concerns in favour of industrial clearances, so that India’s sluggish growth can once again be revived. As the leaders of the G-20 group of major economies meets in Australia this week, Modi’s commitment to this approach, rather than the low-carbon one that China has embraced, will be tested.