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India holds firm on blocking global customs deal

India on Friday (25 July) said it wanted "visible" signs the WTO would agree to its vast food subsidy schemes before approving a landmark global customs pact as talks went down to the wire.

NEW DELHI: India on Friday (25 July) said it wanted "visible" signs the World Trade Organisation (WTO) would agree to its vast food subsidy schemes before approving a landmark global customs pact as talks went down to the wire.

Refusal by India to endorse the agreement streamlining customs procedures could derail the first big global trade reform by the WTO in two decades.

The deal must be ratified by all WTO members by July 31 and is to be implemented in mid-2015.

But Indian Commerce Minister Nirmala Sitharaman told parliament New Delhi "would find it difficult to join the consensus" unless it gets WTO assurances on freedom to roll out food security programmes for its hundreds of millions of poor.

Sitharaman's statement came as WTO members were in Geneva for what was envisioned as rubber-stamp approval of the Trade Facilitation Agreement or TFA, reached in Bali last year. The agreement is aimed at lowering trade barriers and spurring trade between developing and developed countries and could add US$1 trillion to the global economy, WTO officials say.

While there has been progress on the trade deal, other decisions on food stockpiling and other development issues "have been sidelined", Sitharaman said.

India wants "visible outcomes" demonstrating WTO members "will engage in negotiations with commitment to find a permanent solution on public stockholding", she said.

Separately, India's government in a statement late Friday (25 July) said it had told fellow WTO members it lacked "trust that there will be constructive engagement on issues that impact the livelihood of a very significant part of the global population".

FOOD STOCKPILE ‘PEACE CLAUSE’

Prime Minister Narendra Modi's Bharatiya Janata Party government, elected in May, warned earlier this month it might not ratify the pact, citing worries about WTO acceptance of its food stockpile and subsidies programme, a hot-button political issue with many poor voters.

The WTO can approve the trade agreement by a simple majority but this would be highly unusual as it normally operates by consensus.

Under India's government stockpile programme, grain is bought from farmers at often higher-than-market rates and sold at subsidised prices to the poor.

Rich WTO member nations say food stockpiles and subsidies distort trade.

When the Bali deal was struck, WTO members agreed on a "peace clause" to allow India's food stockpile programme with no penalties until a "permanent" solution by 2017. But since then there have been 20 meetings on the trade pact and just two on agriculture, Indian officials say.

While the EU said in a statement failure to adopt the pact would mean loss of "a great opportunity to mobilise trade as an instrument for growth" and damage WTO credibility, Indian business leaders urged the government to stand firm.

"India must hold its ground" and developed countries "must be told in clear terms the issue of farmers' security and welfare of the poor is not negotiable", the Association of Chambers of Commerce and Industry of India said late Friday (25 July).

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