Scrambled diplomacy by the Bharatiya Janata Party (BJP) government in India has tried to mitigate the effects of its last minute refusal to sign the World Trade Organisation’s very significant Trade Facilitation Agreement (TFA) pact that was agreed by all parties in Bali last year. The deal is an important step forward for world prosperity and would have been the WTO’s single major success after 19 years of failure, which would add $1 trillion (Dh3.67 trillion) and 21 million jobs to the world economy.
Instead, India changed its mind and rejected the deal on July 31, which meant that it automatically lapsed. India’s reason for its refusal to pass the previously agreed deal on easing global trade was that it wanted a parallel demand for concessions on its plan to subsidise and stockpile food grains to be conceded immediately by the other 152 WTO nations rather than waiting until 2017 as had been agreed in Bali. Nonetheless, Indian diplomats have insisted that India still wants to sign the free trade deal despite wrecking it, and they are putting out a message that if the rest of the WTO agrees on the food subsidies, India can sign the TFA in September.
This disingenuous position was dismissed by the US Secretary of State John Kerry who was on a visit to India at the time of the refusal. He told Prime Minister Narendra Modi that India’s refusal to sign the trade deal had undermined trust in India, as it had previously said it would sign and then changed its mind too late for the slow-moving WTO to act.
Some countries, including the US, the European Union, Australia, and Japan, have already discussed a plan to exclude India from the facilitation agreement and push ahead regardless without India in order to have some progress on the table, while other member states argue that India is too big to ignore. What is clear is that the free trade deal must happen, as free trade has done more to raise world prosperity than any other single step.
