Why India Is Not Agreeing to Tfa

Why India is not agreeing to TFA?

India has made its stance clear that it will not easily give in to pressure from the Western world over trade protocols of the World Trade Organisation, as was also discussed during the talks in Bali in December 2013. India fears that agreeing to the trade facilitation agreement (TFA) could compromise its own food security.

What is the TFA?

The TFA aims to fast track any movement of goods among countries by cutting down bureaucratic obligations. The problem with TFA runs in a clause that says farm subsidies cannot be more than 10 percent of the value of agricultural production. If the cap is breached, other members can challenge it and also go on to impose trade sanctions on the country.

The developing countries would have a problem with the solutions offered by the developed countries as without the subsidies the food security of the developing nations could be seriously harmed. India agreed to the TFA in Bali only under the condition that interim relief would be provided to the developing nations. It said no legal actions or sanctions would be imposed on the developing nations till 2017, by which time a solution would be worked out among the nations. However, this interim relief would not be applicable if such subsidies would lead to trade distortions, by which one means, that prices of exports and imports cannot be affected by this.

Why is India opposed to TFA?

India's Food Security Act, which is binding on the government by law now, implies that the government will provide very cheap food to the most vulnerable part of the population at extremely low prices. Apart from providing subsidies to the consumers, through the public distribution system, it also provides subsidies to the producers of food grains. So it buys food grains from farmers at a minimum support price, and subsidises inputs like electricity and fertiliser.

The first problem is with the 10% cap on subsidies which will not be possible for India to achieve....