India rejects push to set multilateral rules on e-commerce

New Delhi: India on Thursday rejected a push to set multilateral rules on e-commerce and decided to send a team of trade officials to the World Trade Organization (WTO) headquarters in Geneva to find a permanent solution to the long-pending issue of public procurement of foodgrain.

After a meeting with WTO chief Roberto Azevedo in her office, commerce minister Nirmala Sitharaman said that though she is aware that many discussion papers have been floated on e-commerce, it should not be part of the agenda at the 11th WTO ministerial.

“I am ready to join the talks, but it is not part of my agenda for the upcoming ministerial. Because every country is having a big churn in e-commerce and technology is fast-moving. A final understanding on the matter is yet to be reached. Therefore, it will not be proper to regulate or define e-commerce at present,” she told reporters.

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The next WTO ministerial is scheduled to be held in Buenos Aires between 11-14 December.

Earlier in the day, Azevedo said India is within its rights to oppose any proposal on e-commerce at the WTO. “Negotiations on e-commerce at this stage are very vague. There are 11 papers submitted on the issue. I myself am not very optimistic that we will solve very contentious issues such as server localization, data flows. I have not heard anybody talk about market access yet,” he said.

Azevedo was speaking at an event organized by the Confederation of Indian Industry.

He met executives from technology start-ups like Flipkart, Snapdeal and Paytm on Wednesday under the aegis of India International Chamber of Commerce. When asked about the deliberations at the closed door meeting, Azevedo said representatives were generally curious about policy developments in the field of e-commerce.

On the issue of public stockholding of foodgrain, Sitharaman said India needs a permanent solution because it has to procure large amounts of foodgrain every year to meet the constitutionally mandated public distribution program.

“We have to maintain adequate stock to meet the shortfall in procurement during drought years. We have provided enough data that our procurements are not market-distorting,” she said.

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The issue of public stockholding of food revolves around the procurement of foodgrain from farmers at prices fixed by governments in order to promote the food security of poor countries. As these prices involve a degree of government subsidy, there is a cap on these subsidies as they could otherwise end up distorting global prices. However, developing countries insist that they should not be penalized for breaching any limits, arguing that such stockholdings are crucial for food security.

Though under the interim solution developed countries have pledged not to drag developing countries into disputes if they breach permissible subsidy levels, strict disclosure norms and the provision that a country cannot launch any new food program under the so-called Bali pact have virtually made the pact infructuous.

The deal incorporated India’s stand that a temporary solution on public stockholding for food security reached at Bali in 2013 will continue indefinitely and not just for four years, as agreed earlier, after Prime Minister Narendra Modi’s government opposed the deal, calling it “unbalanced” because it failed to take care of the concerns of developing nations on food security.

India also opposes a WTO rule that caps subsidies to farmers at 10% of the total value of agricultural production based on 1986-88 prices. It argues that the base year is now outdated and it needs to be given leeway to stock enough foodgrain to ensure food security for millions of poor people. India has proposed replacing the old base year with the dynamic average of foodgrain prices of three recent years.

Sitharaman said within a few days India will submit to the WTO a legally vetted document on its proposal of trade facilitation in services and wants it to be part of the 11th WTO Ministerial in December.

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Sitharaman also told Azevedo that the pending issues of the ministerial declarations of Bali and Nairobi have to be taken up at the Buenos Aires ministerial, indicating India’s insistence on continuing with the Doha Development Agenda.

On a possible deal on curbing fisheries subsidies, Sitharaman said India too does not want illegal, unreported and unregulated (IUU) fishing but it should have the policy space to support small, traditional fishermen living in coastal areas.

Representatives of over 80 civil society groups met Azevedo to convey their concerns related to the current negotiations at the WTO, especially those on agriculture.

Dipa Sinha, an assistant professor at Ambedkar University in Delhi and an activist with the Right to Food Campaign, said, “Food security cannot be ensured for India’s poor consumers without ensuring the ability of farmers to produce. The very difficult compliance conditions of the current Peace Clause on the Food Security Proposal for public food stockholding makes it ineffective in protecting essential and minimum domestic subsidies through the MSP (minimum support price) and must be replaced by the permanent solution that fully allows such subsidies by 2017.”

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