India threatens to block global trade deal
By NEHA THIRANI BAGRI
The New York Times | July 26,2014
Indian street vendors eat a meal before starting their day’s work in Allahabad, India. The food they eat - which is subsidized by the Indian government, is part of a global trade deal spat.
MUMBAI, India — India could put a landmark World Trade Organization deal in jeopardy at hectic negotiations in Geneva after saying that it would withhold support for the agreement unless there was simultaneous progress on resolving a dispute over its food security program.
India would like the WTO — which set itself a deadline of July 31 for the deal on the movement of goods across borders — to address its concerns over a cap on subsidies that could limit government stocks of grain that are part of its food program.
A meeting of the General Council, the WTO’s highest nonministerial decision-making body, was suspended Thursday because of a lack of consensus.
Under an established schedule, an agreement on the first phase must be completed by July 31, when all of the 160 member countries would sign the measure, creating a protocol. A veto from the Indian government would disrupt that process.
The trade package, initially agreed on at a ministerial meeting in December in Bali, Indonesia, is the first comprehensive multilateral agreement reached by the organization since its inception in 1995. The agreement, aimed at streamlining global trade, would create legally binding commitments for all member countries to decrease red tape, upgrade border infrastructure and simplify customs procedures to ensure the easier movement of goods across international borders.
Proponents of the measure say that it would lead to the infusion of $1 trillion into the global economy and add 21 million jobs. Critics point out that developing countries would have to make a substantial investment to modernize their ports and borders.
The Indian government buys grain from farmers and stockpiles it for a public distribution system, in which it is sold at government-run stores at subsidized prices.
The National Food Security Act, introduced by the government last year, extended the subsidy to 75 percent of India’s rural population and 50 percent of the urban population. But WTO rules mandate that countries cannot subsidize more than 10 percent of grain produced for food, because doing so would distort the market for trade. India wants to eliminate that ceiling to maintain its food security program.
In the first week of July, India vetoed the trade agreement at a preparatory meeting in Geneva, saying that talks about finding a permanent solution to the subsidy issue were not progressing.
WTO members, including India, agreed in Bali in December to a temporary solution where developing countries would not be penalized for breaching their subsidy levels until a permanent solution was found by 2017, but the Indian government now wants immediate talks.