Eyes on India as deadline for key trade pact looms

NEW DELHI (AFP) - India under new Prime Minister Narendra Modi could take a stand Wednesday on whether it will support a key global trade pact which faces an end-of-the-month deadline for adoption, a government official said.

If India does not give its backing, it could delay or derail the deal streamlining customs procedures that would mark the first big global trade reform by the World Trade Organisation (WTO) in two decades.

India's Bharatiya Janata Party government, elected in May, warned earlier this month it might not ratify the trade facilitation agreement or TFA reached by the 160 WTO members last year in Bali. The agreement is aimed at lowering trade barriers with the intention of making it easier for developing countries to trade with the developed world in global markets.

In a down-to-the-wire finish, New Delhi is seeking assurances on freedom to roll out food security programmes for its vast poor population. "India wants the facilitation agreement but other concerns (on food security) must also be met," the trade ministry official said late Tuesday, asking not to be named.

The official added that the cabinet was expected to meet Wednesday where it was likely to enunciate a position. To come into effect, the TFA must be ratified by all WTO members by the end of this month and mid-2015 has been set for implementation. The WTO can decide by a simple majority but normally operates by consensus. Indian media reports have said New Delhi may seek a ratification delay until December 31.

India's reservations over the trade pact, which WTO officials say could add US$1 trillion to annual global gross domestic product by making it easier for goods to cross borders, came into the spotlight earlier in July. The government warned in a statement it could be "difficult to join the consensus" unless it got "visible outcomes" convincing it that members would engage seriously in negotiations on finding a solution on food stockpiling.

Commerce Minister Nirmala Sitharaman underscored New Delhi's concerns when trade officials of the Group of 20 industrial and developing nations met in Australia last weekend. Australian Trade Minister Andrew Robb was quoted in media reports as saying "all efforts" would be made "to establish procedures that will give comfort to India on its food security".

Under India's stockpile programme, rice and wheat are bought from farmers by government agencies at normally higher-than-market rates and sold to the poor at subsidised prices. But rich WTO member nations fear permitting food stockpiles creates trade distortions.

At the time of the Bali agreement, WTO members agreed on a "peace clause" to protect India from WTO action over food security stockpiles until a "permanent" solution to the issue was reached by 2017. But since then, there have been 20 meetings on the trade pact and just two on agriculture, Indian officials say. -AFP