India-US agreed to resolve differences over public stockholding for food security under WTO
India and the US agreed to resolve their differences over public stockholding for food security and opened path for TFA of WTO.
India and the United States on 13 November 2014 reached an agreement to resolve the differences over public stockholding for food security under World Trade Organisation (WTO).
As per the deal agreed between India and the US, the Peace Clause under Bali package will be allowed to continue in perpetuity and India’s food security programme will not be challenged under the WTO rules until a permanent solution to it is found.
Under the Peace Clause, a four year interim period starting from December 2013 and ending on December 2017 is provided during which all the issues related to food security would be addressed and a permanent solution will be reached.
However, bilateral agreement between India and the US need an endorsement by the 160 WTO members. In lieu of this India will now move its proposal on food security before the WTO’s General Council in December 2014.
The breakthrough in the stalled WTO process over TFA comes close on the heel of US-China pact to cut tariffs on IT products and U.S. agreement with China on carbon emissions. These two pacts were agreed between US and China during APEC Summit in Beijing on 11 November 2014
Impact of the India-US deal on WTO trade reforms
The agreement will help pave the way for reaching a consensus on Bali Package of WTO and help implement far reaching reforms of custom rules under Trade Facilitation Agreement (TFA). TFA aims at simplifying customs procedure, increasing transparency and reducing transactions cost to allow unhindered trade.
According to the International Chamber of Commerce (ICC) streamlining the customs procedures could add 1 trillion US dollars to the world economy and create 21 million jobs across the world.
This in turn will help revive the WTO as a global trade body, the future of which became uncertain after India vetoed to sign the TFA in July 2014 until a permanent solution to the issue of food security was found.
How the deal will help India?
Further, it will help India continue its food security programme and food subsidy. India was concerned that the WTO rules were limiting its farm subsidies and would undermine its spending on food stockpiles intended to ensure that the poor have enough to eat.
In a recent disclosure to the WTO, India said its state food procurement cost 13.8 billion US dollars in 2010-11, part of the total of 56.1 billion US dollars it spends on farm support. Wheat stocks, at 30 million tonnes, are more than double official target levels