WTO reform talks face U.S.-India wall in Cameroon, diplomats say

By Olivia Le Poidevin

YAOUNDE, March 27 (Reuters) – Large differences remain between most countries and the U.S. and India as trade ministers meet to discuss reforms at the World Trade Organization, two diplomats told Reuters on Friday.

The ministers are meeting in Yaounde, Cameroon, as the organisation faces a critical test to its future amid a year of tariff-fuelled trade turmoil and major disruption to shipping, energy prices and supply chains due to the Middle East conflict.

“There is a real commitment among ministers to reach an agreement on reforms, but there is a big elephant in the room blocking: India and the U.S.,” a senior diplomat told Reuters.

Another diplomat from an African country said India so far has not shown signs of a change in position. Some flexibility, however, might be possible, the person added. The diplomats declined to be named due to the sensitivity of the negotiations.

While the U.S. and India acknowledge the need to reform the global trading system, they have resisted proposals of a substantive workplan on reforms.

“Unfortunately on reform I don’t see much room for manoeuvre between the U.S. and India’s positions,” said the senior diplomat.

India has also opposed an agreement to aid investment into developing countries and the U.S. desire to permanently extend an e-commerce moratorium on customs duties on electronic transmissions ​like digital downloads, which ⁠expires this month.

“The U.S., China, EU and UK positions are reasonable, but there is one party that we need to see compromise from to make progress – India,” said Chris Southworth, the Secretary General of the UK International Chamber of Commerce

“I think frustration among members will start to spillover here in Yaounde if we see no progress.”

The European Union and parties to the Comprehensive and ‌Progressive Agreement for Trans-Pacific Partnership said the WTO needs deep reform and is at a “critical juncture.” The CPTTP is a trade deal encompassing 12 countries including Japan, Britain, Canada, Mexico, Australia and Malaysia.

INDIA’S POSITION

India’s Minister of Commerce and Industry Piyush Goyal has cast doubt on U.S. efforts to extend the e-commerce moratorium, saying it warranted a “careful reconsideration”. India is concerned about a ​loss of tariff revenue.

U.S. Trade Representative Jamieson Greer said on Thursday Washington was not interested in a temporary extension to the ban, only a permanent one.

Goyal has also challenged moves by the EU, U.S., Canada and others for a subset of members to take decisions plurilaterally, saying any outcome should be agreed by consensus.

That has cast a shadow over whether an Investment Facilitation for Development Agreement to encourage foreign direct investment in developing and least-developed countries can be incorporated into the WTO rule book in Yaounde.

Turkey on Thursday lifted its opposition to it.

Goyal’s position showed India wants to protect the WTO’s core architecture, said Ajay Srivastava, founder of think tank Global Trade Research Initiative and a former Indian negotiator.

“Together, these risk turning the WTO from a rules-based body into one driven by power and selective coalitions,” he said.

There is also deadlock over one of New Delhi’s key priorities: a permanent solution on public stock holding to allow developing countries to give subsidies to rice and wheat farmers through a price support mechanism.

Big agricultural exporters like the U.S., EU and Australia fear it would let countries like India build large stocks of foodstuffs and dispose surpluses, potentially distorting trade.

Randa Sengupta, a senior researcher at think tank, the Third World Network, said PSH was important for supporting farmers and enabling food security for poorer communities in India.

‘CONSTRUCTIVE’ TALKS

Still, a concrete reform workplan was within reach, Norway’s Foreign Minister Espen Barth Eide told Reuters.

“People are beginning to engage in the real questions,” he said, pointing to talks on the WTO’s Most Favored Nation principle to treat states equally, while allowing exceptions to national security.

Similarly, Britain’s Business Secretary Peter Kyle said a text on reforms was emerging and that constructive talks were taking place to ensure broad agreement.

(Reporting by Olivia Le Poidevin in Yaounde, additional reporting by Manoj Kumar in New Delhi; Editing by Arun Koyyur)