Talks for the first major accord in the World Trade Organization’s 19-year history collapsed over objections raised by India, which was seeking to bolster farm protections.
Negotiators for a Trade Facilitation Agreement at WTO headquarters in Geneva failed to agree as a midnight deadline passed to implement part of the accord by the end of July. India refused to go along without assurances the pact would allow it to keep protections for its domestically produced food.
“We tried everything we could. But it has not proved possible,” WTO Director-General Roberto Azevedo, said in a statement.
The failure is a setback for the global trade talks and throws into question the ability of the WTO to serve as a forum for international accords as well as its status an arbiter of trade disputes. The U.S.’s envoy to the WTO last week said a failure to agree would be tantamount to killing the accord, struck in Bali, Indonesia, in December.
The WTO estimated that the deal would have stimulated the world economy by more than $1 trillion by cutting regulatory hurdles and red tape at international borders.
“Now we’re back to square one, to where we were before Bali,” said Biswajit Dhar, an economics professor and trade specialist at Jawaharlal Nehru University in New Delhi.
“Hopefully, the members all come back to the table and pick up negotiations instead of letting them die” as they did during a round of trade talks in 2008, he said.
The U.S. “regrets that a handful of members have decided not to adhere to their commitment” under the Bali agreement, according to a statement by U.S. Trade Representative Michael Froman.
“Geneva will be quiet for the next several weeks,” Froman said in the statement. “This is a good time for all of us to reflect on these developments and to consider the implications going forward.”
The Bali agreement, reached under Indian Prime Minister Narendra Modi’s predecessor, lets India and other developing countries subsidize food staples so long as they don’t distort trade. Members also agreed to negotiate a permanent solution for adoption at a meeting scheduled for 2017, the text says.
Negotiators were trying yesterday to agree on a technical provision of the trade deal, which would allow nations to begin steps to ratify the accord in their own countries.
“The fact we do not have a conclusion means that we are entering a new phase in our work -- a phase which strikes me as being full of uncertainties,” Azevedo said.
WTO members should take the coming weeks to consider how to move forward when they reconvene in September, he said.
Australia’s Minister of Trade Andrew Robb said it was “difficult to see a way forward in the current circumstances.”
“Australia is deeply disappointed that it has not been possible to meet the deadline,” he said in an e-mailed statement. “This failure is a great blow to the confidence revived in Bali that the WTO can deliver negotiated outcomes.”
An accord to smooth commerce at borders, negotiated by all 160 WTO members, is an increasingly unlikely option, according to a person familiar with the talks, who spoke on condition of anonymity.
WTO members are now talking informally about moving ahead without India, and may use the already negotiated text as the basis for those discussions, according to the person.
“Today’s developments suggest that there is little hope for truly global trade talks to take place,” Jake Colvin, vice president for global trade issues at that National Foreign Trade Council in Washington, said today in an e-mailed statement.
“What is most impactful is the slowdown or the lost growth opportunities that will happen in the developing world,” Linda Dempsey, vice president of international economic affairs at the National Association of Manufacturers in Washington, said before the talks collapsed. The agreement would have helped U.S. companies expand their exports, she said.
U.S. officials had seen the WTO agreement as a test of Modi’s intent to boost growth, which has slowed in recent years, and as a way to revive relations between the world’s largest democracies.
U.S. Secretary of State John Kerry and Commerce Secretary Penny Pritzker pressed Indian officials to advance the accord during a visit to New Delhi for U.S.-India strategic talks this week.