India, U.S. Agreement Clears Path For Trillion-Dollar WTO Trade Deal

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By Bryce Baschuk

Nov. 13 — India agreed to approve the World Trade Organization's Trade Facilitation Agreement after it reached an understanding with the U.S. to implement a temporary peace clause on its domestic food security program.

The breakthrough in negotiations means that the WTO's first multilateral agreement since its inception 20 years ago will now go before the organization's 160 members for full ratification, likely at its next General Council meeting on Dec. 10 and 11.

India agreed to drop its opposition after U.S. and Indian trade officials agreed to a mechanism that would prevent WTO members from challenging the legality of India's domestic food security programs until a permanent solution is adopted.

“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,” said U.S. Trade Representative Michael Froman in a news release following the agreement.

India Comes Around

“India and the U.S. have successfully resolved their differences relating to the issue of public stockholding for food security purposes in the WTO in a manner that addresses our concerns,” said India's Minister of Commerce and Industry Nirmala Sitharaman in a news release. “This will end the impasse at the WTO and also open the way for implementation of the Trade Facilitation Agreement.”

WTO members previously agreed to streamlined TFA rules at the 2013 ministerial meeting in Bali, Indonesia, as a means to expedite the transportation, release and clearance of international goods among member countries.

WTO members also agreed in Bali to permit India and other developing countries to stockpile their domestic food supplies without violating international trade rules until a final solution could be negotiated at the organization's 2017 conference.

Though India initially supported trade facilitation changes, on July 31 it opposed a WTO protocol agreement to advance the TFA until members agreed to accept its domestic food security programs. India said it feared that without a permanent solution it would be vulnerable to challenges from WTO members who say India's food stockholding programs exceed its agricultural subsidy limits.

Plurilateral Threat

India's decision to drop its demand for a permanent solution to the food security issue in favor of a temporary peace clause stems from a recognition that the multilateral trading system is “too valuable to lose,” Sitharaman said.

In recent weeks, the U.S. and the European Union had actively discussed ways to plurilaterally implement trade facilitation rules among those members that are willing to do so and then apply them to all other members on a most-favored-nation basis.

Such an approach would have further isolated India within the WTO and would have failed to address the remaining elements of the organization's post-Bali agenda.

“While there was much media debate and concerns expressed regarding the impact of India's stand in the WTO, it has undeniably resonated across the world,” Sitharaman said. “Many countries saw merit in what we were asking for. India was not alone or isolated. Others were simply not speaking up.”

Next Steps

“This breakthrough represents a significant step in efforts to get the Bali package and the multilateral trading system back on track,” Azevedo said in a Nov. 13 news release. “It will now be important to consult with all WTO members so that we can collectively resolve the current impasse as quickly as possible.”

WTO members have nearly four weeks to prepare the ratification of the TFA before the Dec. 10-11 General Council meeting.

“It is always risky to assume anything but clearly resolving this impasse would greatly improve the outlook for the December General Council, for the remaining Bali issues, for the Post Bali Work Programme and for the WTO's negotiating function,” WTO spokesman Keith Rockwell told Bloomberg BNA.

Rockwell said it remains unclear if members would agree to extend the Dec. 31 deadline to accomplish the goals of the post-Bali agenda. Azevedo recently said the ongoing TFA impasse had made it “very unlikely” that WTO members would be able to complete a detailed work program in the timeline that was outlined by ministers at the 2013 meeting.

To contact the reporter on this story: Bryce Baschuk in Brisbane at correspondents@bna.com

To contact the editor responsible for this story: Jerome Ashton in Washington at jashton@bna.com