Trade officials try to save WTO talks as U.S., India square off over farm subsidies

12/5/2013

U.S. and world negotiators continued around-the-clock talks early Friday morning in Indonesia to salvage a global trade deal that could unravel over a dispute between the United States and India.

The meeting at the Balinese resort of Nusa Dua has been billed as perhaps the last, best chance for the World Trade Organization to salvage its credibility as a forum for expanding global trade agreements — something the Geneva-based group has failed to do over more than a decade of trying.

But months of diplomacy have left trade ministers at odds, particularly with India and the United States deadlocked over India’s demand that it be allowed to expand agricultural subsidies in possible violation of WTO rules. India says the program is integral to its food security; the United States says it will damage regional agriculture markets and hurt smaller countries.

The standoff left a larger trade agreement at risk as the gathering of WTO ministers entered its final hours.

The Bali meeting had been organized with purposefully low expectations. The focus was to agree on issues, such as ways to ease the passage of goods across borders, of such wide benefit and little controversy that they could easily win consensus. Even that narrower sort of agreement was considered important — and of particular interest to U.S. and global businesses that ship parts and goods through multiple countries to make final products. The new WTO director general, Roberto Azevedo, focused his first months in office on completing such a deal, and U.S. officials pressed hard to help.

But the session began early this week under what one European official dubbed “storm clouds of failure,” and it has only grown worse. By today, U.S. Trade Representative Michael Froman said the WTO faced “a debilitating blow” if ministers adjourn without anything to show for the months of effort.

Talks continued until the early morning hours in Bali, in hopes of putting together an agreement that would at least save face for the organization.

For the Obama administration, the outcome in Bali has been frustrating. Even as recently as last week, administration officials thought they had reached a compromise with India that would allow the larger agreement to move ahead.

But it may also validate the administration’s decision to pursue a full slate of trade agreements outside the WTO. That strategy has been criticized as potentially undermining the goal of building a truly global set of trading rules. Given the difficulties in Bali — stemming from disputes over agriculture and development that have plagued the WTO for years now — it may prove foresighted, the only alternative in the absence of a credible global negotiating forum.

The U.S. team is to leave Indonesia on Friday for Singapore, where it will continue talks over the 12-nation Trans-Pacific Partnership, a pact that Froman said he hoped could be largely finished this year.

The group includes major trading countries, such as Japan, Canada and Australia, and smaller but important Asian countries, such as Malaysia and Vietnam. South Korea recently expressed interest in joining.

That pact is being negotiated at the same time as a U.S.-Europe agreement. Between them, the two trade areas would encompass much of the global economy — perhaps prompting other countries to adapt and join, accomplishing in a piecemeal way what the WTO was unable to do with its global approach.

Even if the two agreements move forward, they will have to be approved by Congress, and, in the case of the TPP, criticism has been vocal and sometimes extensive. Lawmakers have demanded, for example, that the treaty include ways to prevent countries from using the value of their currency to gain an advantage in trade.