DEVELOPED   countries have been upset with India for refusing to sign the Trade Facilitation Agreement (TFA) on the issues of Food Subsidy and Food Stockpiling. The media, including the Indian media, have also been generally critical of the stand taken by India at the World Trade Organisation (WTO). As someone who had been associated with the internal committee of Central Board of Excise and Customs on Trade Facilitation during 2005-2009, and who had the privilege of attending the WTO meeting on Trade Facilitation at Geneva in 2005, I have a different take on the matter.

The anguish of the WTO in not being able to ink the deal on 31st of July, 2014 is understandable. The WTO will celebrate its 20th birthday next January, 2015, and it does not have a single trade deal to its credit so far. The 'trade round' system of multilateral trade deals of the WTO has not been able to deliver. On the other hand, trade liberalisation has been achieved in a reasonably big way through regional trade bodies and free trade areas. This has prompted many countries to see more promises on trade promotion in regional and bilateral fora. These developments have raised existential questions for the WTO. But, one cannot blame the developing countries for this state of affairs. It will do good to the developed countries as well to take care of the valid concerns of the developing countries. Enough was not done for concluding the whole 'Bali Package' formulated in Bali in December, 2013. More of it later.

India in general and the Indian Customs in particular, have always been serious about trade facilitation. These would be evident from various steps on computerisation and other trade facilitation measures taken by the Indian Customs , even without a TFA in place. In this regard, a few examples of IT application in Customs for trade facilitation are discussed below.

The Indian Customs EDI System (ICES) is an EDI based automated workflow system for clearance of import and export consignments. The ICES application enables customs officers to complete Customs operations electronically. The ICEGATE (Indian Customs Electronic Data Interchange Gateway) is an e-commerce portal that provides various e-services relating to customs processes. The Indian Customs has adopted for long the Risk management System (RMS) which is an application where the import documents filed by the importers are processed for risk and a large number of consignments are allowed clearance simply based on the importers' self assessment. The ICES, ICEGATE and RMS all work together in tandem. Further, the National Import Data Base (NIDB) provides the valuation data online which helps sorting out valuation issues. The scheme of Accredited Client Programme(ACP) provides special facilitation for importers with impeccable record. The schemes of e-filing of import documents and self assessment have also been doing pretty well. The schemes of Post Clearance Audit (PCA) and Authorised Economic Operator (AEO) are also under the process of implementation.

These apart, the Indian Government has decided to introduce very soon the scheme of "Single Window" clearance with an objective to provide a common interface to the Trade for meeting all regulatory requirements relating to the customs clearance of goods by lodging common data in electronic form. India has also been pursuing its efforts on Globally Networked Customs (GNC) which would ultimately facilitate the exchange of customs information among the WTO members on real time basis. This is a World Customs Organisation (WCO) initiative coming out of its Vision Document titled "Customs in the 21 st Century".

These technology based schemes have been facilitating the Trade in a big way. The aim of these customs initiatives has been to cut down the delay in clearance of goods, which is also the main objective of the TFA. The facts stated above would dispel the misconception in certain quarters that India is averse to Trade Facilitation.

Now the question would be - why did then India block the TFA. India, alongwith certain other developing countries have been calling for concluding the 'Bali Package' in its entirety. The 'Bali Package' formulated at Bali in December, 2013, included food security and certain other Least Developed Countries (LDC) development issues as well ,apart from the TFA. India soon realised that the Developed Countries were mainly interested in pushing the TFA, which would no doubt help the supplying countries (read 'developed countries') more. India therefore proposed for continuation of the interim relief, also called the ' Peace Clause' on the food security front. By virtue of the 'Peace Clause', a country was entitled not to follow the cap of ten percent on food subsidy till the 11 the WTO Ministerial scheduled in 2017. In effect, the Peace Clause ensured that the developing countries, including India, could continue with their food stock holding programme without being challenged through the WTO Dispute Settlement mechanism, even if they breached the ten percent cap; but, only upto 2017.

As of now, India does not have to invoke the Peace Clause since its food subsidy is quite below the present ten percent cap. But India is close to the said cap, particularly in respect of rice and wheat, and she is likely to breach it by 2017, when the Peace Clause would expire. By that time India would have implemented its food security programme substantially.

Under the new food security law, India would be bringing in a USD 4 Billion-a-year scheme to provide subsidised food for around 800 million people. For this purpose, the Minimum Support Price (MSP) offered to the farmers by the government would continue rising.

There is also a fallacy in the method of calculation of subsidies , as laid down by the WTO. According to the WTO rules, the amount of subsidies given by the members is calculated on the external reference price of 1986-88. This has the effect of exaggerating India's protectionism through subsidies. In fact, it has been claimed that India 'provides per capita subsidy less than USD 200 compared to USD 50,000 in the US'. The India government has therefore demanded that the reference year be changed to the current base year , taking into consideration the rise in food prices and rate of inflation. The rich countries (read developed countries) do not want to update the reference-prices. Their apprehension is that this might open the floodgates of demands on similar other issues. But many experts are of the view that the developing countries including India have been given a raw deal in the WTO 'trade-round' talks. In this context, Arvind Subramanian of the Peterson Institute of International Economics, Washington DC has reportedly stated that India has been let down by agreements made during the Uruguay round of trade-talks. During those talks in mid nineties, the rich (developed) countries were allowed to keep many protectionist policies in return for promising to reduce them progressively. He further stated that India, which was deemed not to subsidise domestic agriculture at that time, was thus left with stricter limits on supporting farmers, even as it lowered its import tariffs.

India is not against the TFA , as explained in details. But, in light of the foregoing circumstances, India would like the Peace Clause to continue beyond 2017 until a permanent solution with respect to food subsidy and stock piling is found. India has also urged that there should be enhanced process in the WTO so as to find a permanent solution to subsidy and stock piling, and also to the LDC development issues by the 31 st of December, 2014. Thus, consensus eluded, and the TFA missed the timeline for the time being.

Right after the Doha Declaration, the developed countries have been pushing hard for the TFA. It is but natural that the suppliers would like the customs norms for imported goods to be more simplified. But it has to be realised that the markets must also be enabled to purchase the goods and services from the suppliers abroad. Going by the population, the major markets are in the developing and the least developed countries and these countries have a big percentage of poor people. If they starve, the demand for goods and services would also come down, much to the detriment of the supplying (developed countries). Hence is the need for more efforts towards 'inclusive growth', and poverty alleviation. Indian Prime Minister, Narendra Modi has voiced similar concern when he reportedly stated that the developed countries should also understand the challenges of poverty in developing nations and their government's responsibilities to address them.

What is needed is a balanced view, and India has done well with respect to her stand in the WTO talks in Geneva in last July. India has also kept the window open with her later proposal which is expected to be discussed in the September meet at Geneva. Let us hope- 'Come September', and all the WTO countries will have reasons to rejoice, dancing with that old charming number !

(The author is Former Chairman, Central Board of Excise and Customs, India.)