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India, US end row over food subsidy

India, US end row over food subsidy
Highlights

India and the US on Thursday ended the 3-month-long impasse over the WTO (World Trade Organisation) accord to ease global customs rules. A major breakthrough has been reached on the issue of food stockpiling.

  • Breakthrough deal to pave way for WTO Trade Facilitation Pact
  • It will serve as basis for India’s talks with other WTO members

New Delhi: India and the US on Thursday ended the 3-month-long impasse over the WTO (World Trade Organisation) accord to ease global customs rules. A major breakthrough has been reached on the issue of food stockpiling.

The agreement comes two days ahead of the G-20 Summit in Australia, which will be attended by Prime Minister Narendra Modi and other world leaders including the US President Barack Obama. The two-day meet begins on Saturday in Brisbane and WTO related matters are likely to come up during discussion between world leaders.
Commerce Minister Nirmala Sitharaman on Thursday said the deal opens the way for a consensus on the Trade Facilitation Agreement (TFA) which had eluded the World Trade Organisation members in July.

As per the agreement, the US will support India's proposal at WTO that 'peace clause', crucial for uninterrupted implementation of India's food security programme, should continue indefinitely till a permanent solution is found. This will enable India to continue procurement and stocking of foodgrain for distribution to poor under its food security programme without attracting any kind of action from WTO members even if it breaches the 10 per cent subsidy cap as prescribed by the multilateral trade body.

As per the Bali agreement, the peace clause was to continue till 2017. The differences on the public stock holding of foodgrains between the developed countries led by the US and developing nations including India led to impasse over ratification of the trade facilitation agreement (TFA) at Geneva in July. The agreement between the US and India, according to WTO Director General Roberto Azevedo, will provide a basis to intensify consultations with other WTO members to overcome the present stalemate and to promptly implement all Bali ministerial decisions.

India's objections are on the WTO limits on agriculture subsidies at 10 per cent of the total value of foodgrain production, and on stockpiling foodgrain. Complying with the country's Food Security Act passed last year that guarantees subsidised foodgrains to around 70 per cent of the population could result in breaching these limits leading to penalties for India.

At Bali, the ministers also agreed, by what is called the "peace clause", that till 2017 no country can move the dispute settlement body of the WTO against another member if its government was found to be breaching the level of subsidy freeze that was permitted.

"Please extend the peace clause and find us a permanent solution. Do not make us wait till 2017. These are legitimate demands," Sitharaman had said here on Sunday.

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