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India threatens to derail WTO deal, puts food security rider; US angry

India blocked an agreement on new global customs rules on Thursday, angering fellow members of the World Trade Organization who say Delhi's veto could be costly, economically and politically.

business Updated: Jul 26, 2014 21:24 IST
HT Correspondent
HT Correspondent
Hindustan Times
World Trade Organization,India blocks agreement,Bali

India told the World Trade Organisation on Friday it will only back a worldwide reform of customs rules — the so-called trade facilitation agreement (TFA) — if its demands on rules for government-driven food procurement and welfare schemes are implemented in the same timeframe.

“India is of the view that the TFA must be implemented only as part of a single undertaking including the permanent solution on food security,” Indian ambassador Anjali Prasad told a WTO meeting. “My delegation is of the view that the adoption of the TFA Protocol be postponed till a permanent solution on public stockholding for food security is found.”

The move triggered strong reactions from the fellow WTO members with the US warning that an ultimatum by India would end global trade reform efforts.

“Today, we are extremely discouraged that a small handful of members in this organisation are ready to walk away from their commitments at Bali, to kill the Bali agreement, to kill the power of that good faith and goodwill we all shared, to flip the lights in this building back to dark,” US ambassador Michael Punke warned in a speech to the Geneva-based body on Friday.

Read: India willing to stall WTO deal to ensure food security for all

As reported in HT on July 21, India made it clear that it will continue to oppose the TFA’s adoption if the deal doesn’t come bundled with a permanent solution that will allow unhindered roll-out of welfare schemes such as the food security programme.

“Our expectations have been completely belied by the developments after the Bali Ministerial. As we have consistently pointed out, India is seriously concerned about the lack of progress on some of the Bali outcomes and minimal movement on the others,” the commerce ministry said in a statement Friday.

“We seem to be repeating our past mistakes. A clear will to engage in areas of interest to developing countries is conspicuously absent,” the statement said.
At the Bali Ministerial in December last year, the WTO member countries had agreed to make trade easier, faster and cheaper by making systems transparent and reducing red tape by agreeing to adopt the TFA from July 31.

New Delhi is of the view that without a permanent solution on food subsidies, India’s public stockholding programmes such a buffer stock of foodgrains will be hampered by the present ceiling on subsidy to farmers.

Read:Defending India’s stance on food subsidy at WTO

Existing rules cap the value of food subsidies at 10% of the value of production. But the way the support is calculated at prices of more than two decades earlier means many countries would find it difficult to stay within the limit potentially attracting strong penalties from the trade body.

This will affect India’s food security programme and food grain procurement through the minimum support prices (MSP).

“Even seven months after Bali, we do not have the required confidence and trust that there will be constructive engagement on issues that impact the livelihood of a very significant part of the global population,” the statement said.

“All we are asking is that the public stockholding issue as well as other decisions of Bali be taken forward in the same timeframe as TFA,” it said.

The issue relating to public stockholding is an agreed part of the 2008 text and represents a life and death situation for a number of developing countries and LDCs.

First Published: Jul 25, 2014 10:17 IST