WTO deadlock ends: India, US strike deal, boost for Modi

Smodi-nirmalaignalling a triumph of the negotiating prowess of the Narendra Modi government, India and the US have managed to strike a compromise formula on food subsidies, which paves the way for salvaging the stalled World Trade Organization (WTO) deal on easing of customs rules.

The mid-way formula that ended months of impasse in global trade negotiations  envisaged an indefinite “peace clause” on food security until a permanent solution is found, a key demand of India for which Indian negotiators played hardball, resisting concerted pressure from developed countries. A “peace clause” provided legal security to member countries and protects them from being challenged under WTO’s subsidy caps. In India’s case, it effectively means that the country can continue with its food security programmes without attracting WTO penalties pending a permanent solution to the contentious issue of subsidies.

“The WTO General Council has to consider India’s proposal,” India’s Commerce and Industry Minister Nirmala Sitharaman said in New Delhi November 13. “WTO General Council will receive India’s proposal and US will support us,” Ms Sitharaman said. She stressed that there was a greater understanding of India’s position after Prime Minister Narendra Modi’s visit to the US.

nirmala-fromanThe US has hailed the new deal. “The agreement announced today (Thursday) between the US and India paves the way for full implementation of the WTO’s Trade Facilitation Agreement (TFA)…The agreement also reflects shared understandings regarding the WTO’s work on food security,” US Trade Representative Michael Froman said in a statement.

“We now look forward to working with all WTO members and with Director-General Roberto Azevedo to reach a consensus that enables full implementation of all elements of the landmark Bali Package, including the TFA,” he added.

The deal could not have come at a better time as Prime Minister Modi heads for his first G20 summit of the world’s leading and emerging economies in Brisbane November 15-16. India faced the tag of a deal-breaker after it refused to bow to global pressure to agree to the TFA. Ms Sitharaman, however, rejected reports of India’s global marginalisation after it relentlessly opposed the Trade Facilitation Agreement on grounds that it impacted the Indian government’s policy for food security. “Many countries saw merit in what we were asking for. India was never isolated or alone. Others weren’t speaking up,” she said.

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