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World trade
The Indian problem
Opposition to a global trade deal risks hurting the very countries India claims it is trying
to protect
INDIA, home to a third of the world’s extremely poor people, takes pride in being a
champion of the poor. But words are one thing, deeds another. Right now, India
stands in the way of a deal that members of the World Trade Organisation (WTO) are
hoping to do in less than two weeks’ time—and its stubborn opposition could
deliver a serious blow to the poorest countries in the emerging world.
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But a fierce disagreement over agriculture is tangling up the talks and threatening a
breakdown in Bali. India is mostly to blame.
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Domestic politics is part of the problem. Manmohan Singh, India’s prime minister,
would like a deal. But his government faces a general election in the first half of
next year. The leader of his Congress party, Sonia Gandhi, is sure to resist efforts to
weaken the food-security law. India’s truculence is also rooted in its self-image as a
torch-bearer for the interests of the world’s poor.
In election season, politicians often object to sensible but unpopular reforms. Yet
such short-sightedness can prove costly. And in this case it is India and other
developing countries that will pay the highest price. The trade-facilitation
measures in the Bali package would add an estimated $68 billion a year to global
output, with much of the gain concentrated in poor countries. More important,
failure would destroy the credibility of the WTO, a body which boosts the
developing world’s bargaining power.
The WTO already has the look of a vestigial institution. Richer countries are
pushing forward with ambitious new regional deals—including a Trans-Pacific
Partnership and a Trans-Atlantic Trade and Investment Partnership—that exclude
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the biggest emerging markets. Still poorer economies in Africa and Latin America
rely on the WTO to get their voices heard.
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