India has until Oct 21 to back WTO trade agreement, says EU minister

Philip Blenkinsop    Rome   Last Updated: October 16, 2014  | 11:46 IST

(Photo: Reuters)

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The government has until next Tuesday to support a global trade deal struck in 2013 or risk being left out of the agreement to ease worldwide customs rules, the chairman of European Union trade ministers said on Wednesday.

The government in July blocked what would have been thefirst global trade reform in two decades, which according to some estimates would add US $1 trillion and 21 million jobs to the global economy.

"India is not following up what we have all decided in Bali. So we still want to give more time to change its mind," Italy's Deputy Industry Minister Carlo Calenda, who is responsible for trade, told Reuters in an interview.

Calenda said India was being given until the meeting of theWorld Trade Organization's (WTO) general council on October 21 to back the customs deal. Failure to do so would mean one of two things.

"One is to start again with multilateral discussions but not many countries are willing to do that, the other is to say let's consider this binding for those that have the willingness to go ahead," Calenda said, making clear that the latter was far more likely to occur.

Calenda was speaking at the end of a meeting of EU trade ministers in Rome, which he was chairing as Italy currently holds the six-month rotating presidency of the European Union.

The agreement of December, 2013 was a milestone for the WTO, marking the 160-member organisation's first global trade agreement since it was created in 1995.

It also rekindled confidence in its ability to lower barriers to trade worldwide, after 12 years of fruitless negotiations in the Doha round.

The government had insisted that, in exchange for signing the "trade facilitation" agreement, it must see more progress on a parallel pact giving it more freedom to subsidise and stockpile food grains. It got support from Cuba, Venezuela and Bolivia.

The country's new nationalist government led by Prime Minister Narendra Modi has insisted that a permanent agreement on its subsidised food stockpiling must be in place at the same time as the trade facilitation deal, well ahead of a 2017 target set in December last year in Bali.

"There is a scenario where the multilateral becomes pluri-lateral and that is not going to be a positive thing," Calenda said.

That could mean countries including the United States, those of the European Union, Australia, Japan and Norway pushing ahead with a deal among the willing.

Trade experts have said that the failure is likely to end the era of trying to cobble together global trade agreements and to accelerate efforts by smaller groups of like-minded nations to liberalise trade among themselves. The government has been vocal in opposing such moves, making its veto even more surprising.