WTO standoff is over: India, US finally end impasse over food stock holding

After months of stalemate, Commerce Minister Nirmala Sitharaman said that India and US had reached an agreement with regard to public food stock holding and it was expected to help resolve the present deadlock in the World Trade Organisation on account of India’s refusal to ratify it.

The Commerce Minister told reporters that India had resolved its concerns regarding its public food security programmes with the US and it was expected to solve the impasse at the World Trade Organisation.

However, the minister did not reveal any details of the agreement worked out between the two nations.

“The WTO General Council has to consider India’s proposal,” she said, expressing the hope that approval would clear the way for India to sign a protocol enabling implementation of the trade accord.

“WTO General Council will receive India’s proposal and US will support us,” Sitharaman said, while adding that there was a greater understanding of India’s position after Prime Minister Narendra Modi’s visit to the US.

The minister said that India had opposed the Trade Facilitation Agreement only because some of the WTO rules were proving to be a hinderance to the Indian government’s policy for food security.

Sitharaman denied that India had been isolated at the WTO.

“Many countries saw merit in what we were asking for. India was never isolated or alone. Others weren’t speaking up,” she said.

Countries including South Africa, Cuba, Venezuela and other emerging economies had supported India’s stand.

Sitharaman also said that India would continue to back the implementation of the global trade agreement.

“We will continue to work for the implementation of the Bali package and Doha developmental agenda,” she said.

This will “pave the way for spurring the WTO to more such success,” she said, while expressing confidence that members would “take the matter forward in WTO in a constructive spirit”.

“India has never obstructed trade facilitation… We were only trying to safeguard our farmer’s interests,” she added.

The agreement between India and US comes just before the G20 summit later this month which US President Barack Obama and Indian Prime Minister Narendra Modi will be attending.

India decided not to sign the protocol of the Trade Facilitation Agreement (TFA), concluded at the Bali ministerial conference of the WTO held in December last year.

WTO ministers had already agreed to the global reform of customs procedures during the Bali talks but were unable to overcome last minute Indian objections and get it into the WTO rule book by the 31 July deadline.

India was trying to win guarantees to protect a $12 billion annual programme to feed its poor that risks breaking WTO rules on price support subsidies to farmers.

Earlier this month, Finance Minister Arun Jaitley blamed “unreasonable posturing” by some developed countries for the impasse at the WTO talks.

“India is certainly not opposed to trade facilitation. Let me make it very clear… We are agreeing to a multilateral arrangement on trade facilitation but please keep the peace clause alive till the dispute is settled with regard to the stock holding,” Finance Minister Arun Jaitley said at the WEF meet.

Under the peace clause, a WTO member gets immunity against penalty for breaching the food subsidy cap. As per the WTO norms, a developing nation can provide food subsidy of up to 10 percent of the total farm output. “Please agree to the peace clause coexisting with the settlement of the dispute. That’s all…,” Jaitley said.

He added that the food stock holding arrangement, which is being calculated on the prices of 1986-87, itself appears to be unreasonable.

“The peace clause would vanish in four years. Now all that we have requested is the settlement of dispute with regard to the food stock holding and the peace clause must continue to coexist. Therefore till you resolve that issue, India should not be taken to the dispute redressal mechanism. The peace clause must coexist. So the dispute is not with regard to trade facilitation. Trade facilitation has become a victim because of unreasonable posturing by some countries…,” he said, adding that while the trade facilitation pact was negotiated timely, there is no time frame for a decision on food stock holding.