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The Bali Package
By Red Lion
The Bali Package is a trade agreement that was signed on December 2013 by the Ninth Ministerial Conference of the WTO. This was the first trade agreement in WTO history to receive approval from all its members. The passing of this agreement was the product of ongoing and hotly contested discussions. Before the agreement, negotiations came close to collapsing. India’s demand that it should be allowed to extend its domestic agricultural subsidies was met by opposition from the U.S., while Cuba, Bolivia, Nicaragua, and Venezuela objected to the removal of a text relating to the U.S. embargo against Cuba. This package is made up of four key provisions: Trade Facilitation, Agriculture, Export Competition, and Development Issues between the developed and developing world.
This agreement pursues a noble goal of making trade easier between the First and Third world. Developed countries would abolish hard import quotas on agricultural products from the developing world and instead would only be allowed to charge tariffs on amount of agricultural imports exceeding specific limits. Quotas are government imposed restrictions that protect a nation’s domestic production from foreign competition, as well as placing caps on imports. What these specific limits will look like is something to be decided by WTO officialdom. Also, “special treatment” given to developing countries will be monitored under this agreement.
Throughout the talks, the US and other imperialists attempted to declare India’s food security illegal. However, after much perseverance, India won a defensive battle against the WTO for food rights. The WTO was forced to include a “peace clause” that protects India’s food programs and some other countries for the next four years. Even so, India will have to abide by trade regulations outlined by the article on public stock-holding for food security purposes. These countries must prove that their stock-holding programs do not conflict with WTO trade politic. In return for these concessions, developing countries are being asked to streamline customs (border taxes) and other trade systems. Though the timetable for fulfilling these commitments is flexible, developed countries have not promised funding to support such improvements.
Since the 1980’s the WTO has forced Indian grain exporters to charge only 264 rupees per ton of rice. Today, they are demanding an above market price of 1,250 rupees per ton of rice. India’s food security program is a double edged sword. While this is a good measure against foreign investment, and a show of national capitalism, it fails to truly serve the people. India’s food subsidy (which is largely made up of the difference between the price at which the state procures grains and the lower price at which it distributes them through a highly inefficient public distribution system) contributed very little to the economy in the 80’s. Since then, these subsidies have multiplied several times over. Parallel to food security are agricultural subsidies. Agricultural subsidies are aimed at helping farmers and local agribusinesses supplement their income. This allows them to have a say in the cost and supply of agricultural products sold to urban markets. However, the mounting government spending on subsidies has crowded out public investment. Irrigation, rural electrification, rural roads, and extension services have been neglected by the government. Apart from the fiscal burden involved, the rising volume of subsidies for fertilizers, power, and water in India encourage wasteful and environment damaging use of resources, leading to groundwater depletion and soil degradation. All in all, the Bali Package was a win for transnational firms looking for improved access to third world markets.
“Awakening Giants, Feet of Clay: Assessing the Economic Rise of China and India”, by Pranab Bardhan. Pgs. 45, 46. 2010. Princeton University Press.