WTO Talks Near Collapse Over India’s Objections

The first major accord in the World Trade Organization’s 19-year history was on the verge of collapse over objections raised by India.

Negotiators for a Trade Facilitation Agreement at WTO headquarters in Geneva today failed to agree as the talks neared a deadline to implement part of the accord by the end of July. India blocked the pact after failing to receive assurances that it could expand its food-subsidy program.

“My understanding is that the remaining gaps are unbridgeable with the time that we have,” WTO Director General Roberto Azevedo, said in a statement released less than two hours before the midnight deadline in Geneva. “We tried everything we could. But it has not proved possible.”

The move 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 in addition to 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 during in Bali, Indonesia, in December.

The WTO estimated that the deal would’ve 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 expert 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.

Bali Agreement

The Bali agreement, reached under Indian Prime Minister Narendra Modi’s predecessor, lets India and other developing countries subsidize food staples such as rice without the risk of legal challenges so long as they don’t distort trade, according to a text on the WTO’s website. Members also agreed to negotiate a permanent solution for adoption at a meeting scheduled for 2017, the text says.

“In the short term, we hope that the more than 150 members of the WTO who were committed to this outcome will seek to engineer a solution that permits this important agreement to move forward,” Jake Colvin, vice president for global trade issues at that National Foreign Trade Council in Washington, said today in an e-mailed statement.

“More broadly, today’s developments suggest that there is little hope for truly global trade talks to take place,” he said.

Lost Opportunity

“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. She said the agreement would have helped U.S. companies expand their exports.

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.

Before it's here, it's on the Bloomberg Terminal.