U.S., India reach agreement on food security, paving way for global trade deal

The United States and India reached an agreement on public stockpiling of food, said the U.S. trade representative on Thursday, clearing the way for the full implementation of the global Trade Facilitation Agreement (TFA) that has been stalled for months.

The agreement, regarding international rules on governments' stockpiling of food, removes a key obstacle to the implementation of TFA, the first multilateral trade agreement to be concluded in the nearly 20-year history of the World Trade Organization (WTO), said the U.S. Trade Representative Michael Froman in a statement.

A broader package of trade agreements including the TFA was reached at the WTO Ministerial Conference held in Bali last year, with an aim to reduce red tape, facilitate the flow of goods across international borders and cutting transaction costs.

However, talks on the global trade package have reached a deadlock after India, along with a small group of countries, threatened to veto the TFA unless disputes over its food security program were resolved.

India's food subsidy program, under which the government buys food, stockpiles it and sells it at subsidized prices to millions of its citizens living below poverty line, breaches the WTO's rules of a 10-percent cap on government food subsidies. India, which according to the World Bank has about two-thirds of its population living on less than 2 dollars a day, is reluctant to accept the demand.

Thursday's agreement, reached after the United States offered support for India's proposal of a "peace clause," which protects member states from being penalized for breaching their subsidy levels until a permanent solution is found on good security program issues, brought back India to talks on the global trade deal.

This breakthrough will also strengthen the multilateral trading system and give a boost to its ongoing work, including in the area of food security, said the White House.

As decision-making in the WTO is based on consensus among all members, the elements agreed between the United States and India will be discussed with the full WTO membership in the very near future. Enditem