The United States and India have resolved a long-standing dispute over food security, clearing the way for the implementation of a landmark global trade agreement. The breakthrough, announced on Thursday, removes India's objections to the World Trade Organization's Trade Facilitation Agreement (TFA), which was agreed at a WTO summit in Bali in 2013 but had been blocked by India.
India had demanded assurances that its food security programme, worth $12bn, would not be challenged under WTO rules limiting farm subsidies. The programme involves buying grain from farmers at above-market prices and selling it to poor households, as well as stockpiling to guard against shortages. Under the deal, the US has agreed to extend a so-called 'peace clause' indefinitely, meaning India's food stockpiling will not be subject to WTO dispute until a permanent solution is found.
US Trade Representative Michael Froman said in a statement: 'On the basis of this breakthrough with India, 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 Trade Facilitation Agreement.' The agreement still requires endorsement by the full WTO membership, likely at the General Council next month.
The TFA is estimated to add $1tn (£630bn) to the global economy by simplifying customs procedures and reducing trade costs. Analysts have described the deal as a victory for Indian Prime Minister Narendra Modi, who raised the issue during his visit to the US in September. 'This may be considered as a coup of sorts for Prime Minister Modi,' said Vishnu Varathan, senior economist at Mizuho Bank.
Rajiv Biswas, Asia Pacific Chief Economist at IHS, added: 'It is also a positive outcome for the WTO as it will pave the way for a very significant WTO trade liberalization agreement to be implemented at a time when some critics were beginning to question the future role of the WTO.' India's Commerce Minister Nirmala Sitharaman tweeted that the impasse had been 'successfully resolved'.
