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India firm on food subsidies at WTO, trade deal at risk
-The Times of India


NEW DELHI: The government on Friday refused to yield to pressure from developed countries to accept easier customs rules without its food subsidy concerns being addressed, putting at risk a likely deal at the World Trade Organization (WTO).

Developed countries have stepped up the pressure on India saying failure to strike a deal on trade facilitation would stall global trade reforms and deal a massive blow to the WTO by undoing the work done by trade ministers at Bali.

"To jeopardise the food security of millions at the altar of a mere anomaly in the rules is unacceptable... In order to fully understand and address the concerns of members on TFA (trade facilitation agreement), my delegation is of the view that the adoption of the TF protocol be postponed till a permanent solution on public stock holding for food security is found," Anjali Prasad, India's ambassador to the WTO, said at a specially convened meeting to clear the trade facilitation agreement, which promises to ease clearances at ports and airports across the 160 member countries.

Reports said US ambassador Michael Punke warned that efforts by some countries to derail the talks could undermine global trade reform.

"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," Punke was quoted as saying.

India is demanding that the new agreement, which is to be implemented a year later, should be finalized only after WTO members accept the demand from several developing countries, led by India, to change the rules on government food subsidies. Currently, the government has to cap food subsidy at 10% of the value of the production but the value is based on prices prevalent in 1986-88, which have increased up to six times since then. A breach of the cap will limit the ability of developing countries to maintain public stockholding of food grains, which not just benefits farmers but also helps in combating price fluctuations.

In contrast, government officials argued, the developed countries devised rules in a way that their subsidies are not reduced. "What we are talking of is livelihood of our people," said a top-ranking source.

In December, WTO members had agreed to address India's concerns in Bali but they had drafted the deal in a way that the trade facilitation agreement is finalized by July-end, while a final decision on food security and issues of concern to the least developed countries (LDCs) was deferred for a later data.

Since then officials said that the WTO members, led by the developed countries have shown little interest in finding a permanent solution to the issue of public stockholding, which is evident from three meetings on the issue, compared to over 20 for trade facilitation. "As a consequence, 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," Prasad told WTO members in Geneva.

India now realizes this will result in developed countries asking for more concessions in return to agreeing to the demands of the poorer countries.

As a result, India now wants the WTO to postpone a final decision by a few months and convene a special session of the agriculture committee to address the food security concerns. "We can take stock of the issue in October and finalize the deal by December. What is sacrosanct about the July deadline when several deadlines have been missed in the past?" an official said.

Another officer added that India is only playing by WTO rules which believes in "nothing being agreed till everything is agreed".

But the developed countries are accusing India of blocking a deal and saying that in the absence of trade facilitation agreement, the entire trade reforms agenda will be derailed.

An Indian official countered, "We have not blocked the deal. If that was the interpretation, god knows how many times WTO was blocked. Every time the developed countries said things were not acceptable, it wasn't blocked. Why is it now?"