Road from Bali: Moving towards plurilateral reform?

The signing of the trade deal at Bali, Indonesia last year was hailed as a watershed event causing euphoria among the member countries. It was the first time that the World Trade Organisation (WTO) reached an agreement on trade reforms in two decades. The centrepiece of the landmark reform was the Trade Facilitation Agreement (TFA) which would pave the way to expanded global trade adding US $1.0 trillion and create 21 million jobs in the world economy. The objection to the deal from India was overcome by giving it provisional concession to subsidise and stockpile foodgrains. It was agreed that this interim facility going beyond WTO rules would be finalised in 2017.
The deadline to sign the Bali deal to ease worldwide customs rules lapsed on July 31 as India reneged on its promise given at Bali. Though there was a last-minute objection from India to TFA there was a tacit agreement on its part at the last moment that the reform would get into the WTO rule book by the deadline in July. The provisional concession on food subsidy and stockpiling and the promise given to make the concession final by 2017 seemed to have given the necessary assurance to India.
The new government in India appears to have taken a different and rigid stance than its predecessor in insisting on finalising the concession before the TFA was signed. The backtracking by India has come as a surprise and also as a shock to the member countries who agreed on the deal at Bali last December.
Missing the deadline of July 2014 for all practical purposes means the collapse of the first major global trade reform pact. Many WTO member states have voiced frustration after India went back on its commitment.
The US Secretary of State John Kerry told Prime Minister Narendra Modi during his recent visit that India's refusal to sign the trade deal had undermined the country's image. It has been pointed out by US state department officials that failure to sign TFA sent a confusing signal to the global community and will damage the impression the new government was trying to send to the outside world about its intent to liberalise trade.
At the same time doubts have been raised by many about the credibility of India in matters of global trade reform. The impression is gaining ground that the trust that countries have in what India says is going to be seriously diminished.
India's new government has insisted that a permanent agreement on its subsidised food stockpiling must be in place together with the trade facilitation deal, well ahead of the 2017 target set at Bali. The refusal to sign the TFA can have either of two
reasons.
India may have decided that it cannot wait till 2017 for the finalisation of the concession given to it on food subsidy and stockpiling as unforeseen events may intervene to prolong the interim arrangement. Or it may have become suspicious that once TFA is signed member countries may backpedal on the issue of food subsidy as upheld by India.
Whatever may be the reason for India's refusal to sign the deal its stance has dealt a body blow to multi-lateral agreement under WTO. Though Indian officials are confident that the TFA can be resurrected and the deal can be signed by September next, the majority of member countries are not so optimistic.
India expects the WTO director general will call a meeting in September when it will be ready to sign the deal provided TFA and food security issues are passed together.
Judged by the reaction of other member countries, both developed and developing, it is not so certain that comments by Indian officials would open a window for the revival of the TFA. Behind this scepticism among other countries lies India's negative assessment about the economic benefits of TFA. India does not believe that the deal will add US $1.0 trillion to the world economy and create 21 million jobs. It, therefore, does not set a great store by the signing of TFA.
All the member countries who agreed to sign the TFA at Bali last year were shocked when India made it known that it would veto the deal. The eleventh-hour failure drew strong criticism, as well as rumblings about the future of WTO and the multi-lateral system underpinning the organisation.
What looks more likely is that rather than withering away WTO may take a different tack to make it work. Departing from the existing principle of multi-lateral agreement there may be a move towards plurilateral reform leaving behind countries that don't want to be on board in matters of broad agreement on trade reforms.
Member countries have already started seeing the Indian refusal as a trigger for ending Doha Round and pressing ahead with reforms agreed to by majority members of the organisation. Some countries, including America, the EU, Australia, Japan and Norway, have already discussed a plan to exclude India from trade facilitation agreement and move ahead with other countries.
If this comes about India will be credited (discredited?) with initiating a process of major reform in the WTO and the Doha Round of trade negotiations which began in 2001. The procedural reform for negotiation will not sound the death knell of WTO, only herald its re-incarnation in a new form.
Perhaps countries have to wait for the ideal of multi-literalism in trade reforms until their benefits become obvious to all.  
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