Victory for India: US, EU may agree to India’s demands on food subsidy to sign WTO deal

[The Great One]

A global trade deal between India, the United States and the European Union is close to being signed, with India agreeing to sign the stalled international treaty on easier customs rules, The Times of India reported.

India will sign the treaty only after an agreement on the contentious food security issue is reached at the World Trade Organization, and in return the United States and European Union will accept India's demand for providing flexibility to developing countries in fixing minimum support price for farm products, the newspaper reported, citing a source.

On Wednesday, India defied the world in a row over food stockpiling that had crippled attempts to reach a global trade agreement, raising doubts that backroom talks could reach a compromise before a Group of 20 summit this month.

New Delhi's blockade has plunged the WTO into its worst crisis in two decades, leading Director General Roberto Azevedo to float the idea of abandoning the consensus principle on which the 160-member group operates.

Representatives at India's Ministry of Commerce and Industry, the U.S. Department of Commerce and the EU were immediately not available for comment.

 

[TimeTraveller]

Great...

 

[RKO]

they have to..... without India whole deal would be dead!

 

[karan.1970]

NIce

 

[The Great One]

WTO talks set for revival as India nears deal with US, EU - The Times of India

NEW DELHI: After being in deep freeze for over three months, a global trade deal is finally in sight with the US and the European Union showing signs of accepting India's demand for providing flexibility to developing countries in fixing minimum support price for farm products. In return, India will sign the stalled international treaty on easier customs rules once an agreement on the contentious food security issue is reached at the World Trade Organization (WTO).

"India, US and EU are close to some understanding and based on this understanding they will work for a final solution at the WTO," said a source, who did not wish to be identified. Senior commerce department officials are engaged in consultations in Geneva. There are indications that the developed countries will agree not to challenge any breach in food subsidy caps till the calculation formula is reworked.

READ ALSO: US faces pressure to take India to WTO


Global trade talks have been deadlocked after India refused to agree to a trade facilitation agreement to usher in easier rules for goods to flow through ports and airports without its concerns on food security being addressed. Based on current rules, several developing countries are close to breaching the cap on 10% value of production and face the threat of punitive action at WTO. India has argued that the calculation is flawed as it is based on outdated prices and has demanded that formula be reworked.

At the Bali ministerial meeting last December, WTO members had agreed to address India's concerns over a four year period, during which no disputes would be raised at the multilateral body even if the subsidy cap was breached. At the Indonesian island the ministers had also agreed to sign the agreement on customs rules by July 31. The developed world had argued that the rules would provide a $1 trillion boost to a sluggish global economy and pave the way for reviving the 13-year-old Doha dialogue.

READ ALSO: India stays firm on food subsidy, blocks WTO deal

Despite being blamed for "blocking" a global trade deal, India has stuck to its stand. But in recent weeks, officials have indicated that India is willing to settle for a clause that extends the four year "peace clause" to perpetuity — something that is learnt to have been discussed during a meeting between Prime Minister Narendra Modi and US President Barack Obama.

The reports of a settlement at WTO come two days after Modi met ministers and top commerce department officials on Monday. On Monday, sources had then described it as a "review meeting" and had suggested that no firm offers were on the table.

READ ALSO: US warns Indian threat will 'flip the lights' off at WTO

Sources said finance minister Arun Jaitely had taken up the issue and argued India's stand with US secretary of state John Kerry, when he had visited New Delhi in late July. After hearing the government's argument, Kerry had no answers and described it as "reasonable". There was, however, immense pressure on the Obama administration from domestic lobbies in the US. This was evident when a US official, who was part of Kerry's delegation, tried to resile from his position.

READ ALSO: Tough Indian stance taking global trade pact down to the wire

Washington had indicated its "appreciation" for New Delhi's posture during last month's meeting between a top USTR official and commerce & industry minister Nirmala Sitharaman. Similarly, UK chancellor George Osborne had shown support for India's stand, the source said.

 

[Not Sure]

India has begun backroom efforts to break the deadlock, sending a top trade ministry official to Geneva this week for talks with Azevedo and key WTO members.

Trade diplomats said there was no hint, however, that a compromise could be reached on India's demands, which have been vague and varied in the months since its veto.

On Monday, Modi held a meeting of Indian trade ministry officials to discuss how the deadlock could be broken without compromising India's food-security concerns.

"If India has to submit a proposal, it would be presented at the right time," a senior trade ministry official with direct knowledge of the matter told Reuters.

India refuses to bow to foreign calls to scale back a scheme to buy wheat and rice that it distributes to 850 million people. In a recent disclosure to the WTO, India said those purchases cost $13.8 billion in 2010-11, part of the $56.1 billion it spent in total on farm support.

"All that we are requesting is the settlement of the dispute with regard to the food stock holdings, and the peace clause must continue to co-exist," Jaitley said.

Diplomats say that without a WTO deal on trade facilitation, countries could simply tack the draft agreement onto their existing membership terms. They say this would put the onus on India to object, and explain why its interests had been damaged.

Yet economists say WTO members lack any effective means to bring pressure to bear against Asia's third-largest economy, home to a sixth of the world population. (and yet they want these poor to get poorer)

"It's an issue that in India is so politicised; you have hordes of the population living in poverty and depending on food aid," said Shilan Shah, an economist who covers India at Capital Economics in London.

"The WTO hasn't really shown the kind of will to move on without India's agreement. What it demonstrates is how important India is to the global trading community."

-

I'd rather this WTO breaks down than compromise on food stocks. We have the largest population of poor people and the farmers are in the worst situation. It's heartening to see Modi working overtime.

WTO talks set for revival as India nears deal with US, EU - The Times of India

NEW DELHI: After being in deep freeze for over three months, a global trade deal is finally in sight with the US and the European Union showing signs of accepting India's demand for providing flexibility to developing countries in fixing minimum support price for farm products. In return, India will sign the stalled international treaty on easier customs rules once an agreement on the contentious food security issue is reached at the World Trade Organization (WTO).

"India, US and EU are close to some understanding and based on this understanding they will work for a final solution at the WTO," said a source, who did not wish to be identified. Senior commerce department officials are engaged in consultations in Geneva. There are indications that the developed countries will agree not to challenge any breach in food subsidy caps till the calculation formula is reworked.

READ ALSO: US faces pressure to take India to WTO


Global trade talks have been deadlocked after India refused to agree to a trade facilitation agreement to usher in easier rules for goods to flow through ports and airports without its concerns on food security being addressed. Based on current rules, several developing countries are close to breaching the cap on 10% value of production and face the threat of punitive action at WTO. India has argued that the calculation is flawed as it is based on outdated prices and has demanded that formula be reworked.

View attachment 147454

At the Bali ministerial meeting last December, WTO members had agreed to address India's concerns over a four year period, during which no disputes would be raised at the multilateral body even if the subsidy cap was breached. At the Indonesian island the ministers had also agreed to sign the agreement on customs rules by July 31. The developed world had argued that the rules would provide a $1 trillion boost to a sluggish global economy and pave the way for reviving the 13-year-old Doha dialogue.

READ ALSO: India stays firm on food subsidy, blocks WTO deal


View attachment 147455

Despite being blamed for "blocking" a global trade deal, India has stuck to its stand. But in recent weeks, officials have indicated that India is willing to settle for a clause that extends the four year "peace clause" to perpetuity — something that is learnt to have been discussed during a meeting between Prime Minister Narendra Modi and US President Barack Obama.

The reports of a settlement at WTO come two days after Modi met ministers and top commerce department officials on Monday. On Monday, sources had then described it as a "review meeting" and had suggested that no firm offers were on the table.
View attachment 147456


READ ALSO: US warns Indian threat will 'flip the lights' off at WTO

Sources said finance minister Arun Jaitely had taken up the issue and argued India's stand with US secretary of state John Kerry, when he had visited New Delhi in late July. After hearing the government's argument, Kerry had no answers and described it as "reasonable". There was, however, immense pressure on the Obama administration from domestic lobbies in the US. This was evident when a US official, who was part of Kerry's delegation, tried to resile from his position.

READ ALSO: Tough Indian stance taking global trade pact down to the wire

Washington had indicated its "appreciation" for New Delhi's posture during last month's meeting between a top USTR official and commerce & industry minister Nirmala Sitharaman. Similarly, UK chancellor George Osborne had shown support for India's stand, the source said.

And four years later India would have even greater leverage in the negotiations

 

[The Great One]

they have to..... without India whole deal would be dead!

Not necessarily. They could have gone on without India. It is only one country out of 160 and only 2% of the world's total trade flows through India.

 

[Ammyy]

Can any one explain what WTO members want and whats Indian demand???

 

[RKO]

Not necessarily. They could have gone on without India. It is only one country out of 160 and only 2% of the world's total trade flows through India.

I read somewhere. ..that India do have the power to block WTO!

 

[The Great One]

And four years later India would have even greater leverage in the negotiations

No we won't. If a deal isn't striked out within 4 years, then we would automatically become liable to punitive action, meaning that status quo would be acceptable and favorable to the developed nations so they would be the one dictating the terms, not us. I salute Modi government for having the balls to stand up to them. And that is why we are now negotiating for this.

officials have indicated that India is willing to settle for a clause that extends the four year "peace clause" to perpetuity

Can any one explain what WTO members want and whats Indian demand???

This should explain it.

I read somewhere. ..that India do have the power to block WTO!

Any of the 159 members can block it. But they can hold a majority vote, although that doesn't happen very often.

 

[Not Sure]

Can any one explain what WTO members want and whats Indian demand???

WTO is a trade organization that has over 100 member countries.

WTO agreements are multilateral, meaning, all countries have to agree on each point.

WTO members, when agreed upon trade of a specific commodity (food/cotton/fuel etc), will have a say in trade practices of other countries because everyone will have a stake in that commodity since that commodity will be then in the market for all to trade.

WTO Bali agreement (which didn't come to fruition because of India's reservations) stipulates that India should not allow more than 10% of agricultural production to go into subsidizing the farmers.

India has largest number of farmers in the world, and farmers in India are extremely poor, to the extent that many commit suicide.

India is also the home to the largest chunk of poorest people in the world, and by domestic law, Indian government is bound (but not gagged) to provide extremely cheap food to all the poor people (Ration Card / Aadhar Card).

India has also clearly stated that it needs to provide greater amount of subsidies to the farmers (and poor) so it cannot agree to WTO's objections.

WTO objects because India for a great part provides subsidies to the farmers in the form of buying the food at high rates, and distributing it among the poor at low rates. This way farmers get money, and poor get food while the middle class and rich class pay for it in taxes.

WTO is against India's position because India's provision of such subsidies by stockpiling the food means that India is stockpiling that food that can also be bought by other countries - but at higher prices than the price paid by the poor of India.

Had India agreed to WTO's terms, then later on if India tried to stock up food for its poor, the other countries could impose heavy trade levies on India and could even ban other items they import from India.

India has now requested the WTO to keep the Status Quo for four more years and to find a formula to help India with subsidies (basically the money to feed its poor).

In crux, India has asked WTO to find a substitute for its (India's) subsidy on food so that the commodities can be traded without taking the plate away from India's poor.

 

[Ammyy]

WTO is a trade organization that has over 100 member countries.

WTO agreements are multilateral, meaning, all countries have to agree on each point.

WTO members, when agreed upon trade of a specific commodity (food/cotton/fuel etc), will have a say in trade practices of other countries because everyone will have a stake in that commodity since that commodity will be then in the market for all to trade.

WTO Bali agreement (which didn't come to fruition because of India's reservations) stipulates that India should not allow more than 10% of agricultural production to go into subsidizing the farmers.

India has largest number of farmers in the world, and farmers in India are extremely poor, to the extent that many commit suicide.

India is also the home to the largest chunk of poorest people in the world, and by domestic law, Indian government is bound (but not gagged) to provide extremely cheap food to all the poor people (Ration Card / Aadhar Card).

India has also clearly stated that it needs to provide greater amount of subsidies to the farmers (and poor) so it cannot agree to WTO's objections.

WTO objects because India for a great part provides subsidies to the farmers in the form of buying the food at high rates, and distributing it among the poor at low rates. This way farmers get money, and poor get food while the middle class and rich class pay for it in taxes.

WTO is against India's position because India's provision of such subsidies by stockpiling the food means that India is stockpiling that food that can also be bought by other countries - but at higher prices than the price paid by the poor of India.

Had India agreed to WTO's terms, then later on if India tried to stock up food for its poor, the other countries could impose heavy trade levies on India and could even ban other items they import from India.

India has now requested the WTO to keep the Status Quo for four more years and to find a formula to help India with subsidies (basically the money to feed its poor).

In crux, India has asked WTO to find a substitute for its (India's) subsidy on food so that the commodities can be traded without taking the plate away from India's poor.

Thanks for clarification but how can previous government agreed to these terms ??

 

[Indo-guy]

Big diplomatic victory: India rejoices as US takes a u-turn on WTO; Washington backs stand on food security - Economic Times

 

[Not Sure]

Thanks for clarification but how can previous government agreed to these terms ??

The previous government did not agree. The government simply deferred it for a later stage because it couldn't find a solution, nor did it have such political stability at home to take such a strong stand. And since the Government of India is bound by the constitution to provide subsidies to farmers (from the times of Jai Jawan Jai Kisan) and the poor, the previous government couldn't have allowed it even if it wanted to (and I am not insinuating anything here - Indian governments will have to cater to the poor and farmers because they make the largest chunk of voters).

Sorry to have replied after so long, I never got an alert on this thread.

 

[Levina]

WTO objects because India for a great part provides subsidies to the farmers in the form of buying the food at high rates, and distributing it among the poor at low rates. This way farmers get money, and poor get food while the middle class and rich class pay for it in taxes.

WTO is against India's position because India's provision of such subsidies by stockpiling the food means that India is stockpiling that food that can also be bought by other countries - but at higher prices than the price paid by the poor of India.

Had India agreed to WTO's terms, then later on if India tried to stock up food for its poor, the other countries could impose heavy trade levies on India and could even ban other items they import from India.

Awesome!!!
Kudos to our govt.
And thanks for explaining it in simple words.