Published January 08, 2015
The United States and India said Thursday they reached agreement on stockpiling of food by governments, clearing a major stumbling block to a deal to boost world trade.
India had insisted on its right to subsidize grains under a national policy to feed its many poor, while the U.S. and others in the World Trade Organization were more focused on liberalizing agricultural trade.
The two countries did not announce details of their new deal, which will be reviewed by the WTO's general council.
Both countries said, however, their agreement should clear the way for immediate implementation of a global deal that's designed to increase trade by reducing customs red tape.
"We are extremely happy that India and the U.S. have successfully resolved their differences related to the issue of public stockholding for food security purposes," the Indian Ministry of Commerce and Industry said in a statement.
The WTO has said the Trade Facilitation Agreement could boost global trade by $1 trillion, but the possibility of failure in the negotiations had threatened to render the WTO irrelevant as a forum for negotiations after a decade of inertia in trade talks.
The deal was announced as both Prime Minister Narendra Modi and President Barack Obama were visiting Myanmar which was hosting regional summits.
The WTO estimates that easing customs barriers would increase total world trade to $23 trillion from its current estimate of $22 trillion.
Critics of the WTO rules, though, say they may hinder countries from setting their own priorities in environmental protection, worker rights, food security and other areas. And they say sudden reductions in import tariffs can wipe out industries, causing job losses in rich and poor countries.
"Many countries saw merit in what we were asking for. India was not alone or isolated," the commerce ministry said.