India defends decision on failed global trade deal, says needs to protect farmers

NEW DELHI (AFP, REUTERS) - India has defended its decision to scuttle a landmark worldwide trade deal, saying its farmers faced suicide and starvation if the government had backed down on its tough stand at the World Trade Organisation (WTO).

Finance Minister Arun Jaitley said the new right-wing government could not agree to the deal to streamline global customs rules unless the WTO adequately addressed its demand on stockpiling food.

"The fact of the matter is there have been many instances in history where India has been forced to raise its voice against the powerful nations," Mr Jaitley told the NDTV network late on Monday.

Mr Jaitley is the most senior Indian minister to comment on the issue since India refused to ratify the long-sought deal at the WTO by the July 31 deadline.

Earlier, its Trade minister Nirmala Sitharaman told parliament that India is confident that it will be able to persuade members of the 160-strong WTO to understand its concerns over food security.

India's new national government vetoed the adoption of the Trade Facilitation Agreement to simplify, standardise and streamline the rules for shipping goods across borders, having previously agreed to its terms at the ministerial conference in Bali last December. The deal would add US$1 trillion and 21 million jobs to the world economy, according to some estimates.

After drawing widespread condemnation, India has since said it is ready to sign the global trade deal as early as next month if other WTO members agree to its demand for concessions on food subsidies, estimated at US$12 billion (S$ 15 billion) a year.

"India is not standing in way of implementation of Trade Facilitation but seeking equal level of commitment and progress in working on the issue of public stockholding," Ms Sitharaman said.

India fears that once it agrees to trade facilitation - largely seen to help advanced nations - it would have lost the bargaining chip on the subsidy issue.

US Secretary of State John Kerry told Prime Minister Narendra Modi during talks last week that India's position on the deal sent the wrong message on opening up the country's economy.

India's nationalist government, which came to power in May, insists that a permanent agreement on food stockpiling must be agreed swiftly.

India, which has sought since independence to eradicate hunger, buys grain at above-market prices from farmers and sells the food at subsidised prices to some of the hundreds of millions of poor.

The stockpiling is popular with poor voters in the world's largest democracy, but wealthy nations say that the policy distorts global markets.

Mr Jaitley said India must be allowed to continue the measures without fear of challenge at the WTO to feed its poor and protect its impoverished farmers from ruination.

"Our farmers will be reduced to starvation and suicide. We can't be a party to that," he told the network.

"If we did not have the (measures) this few hundred suicides that you hear of would be in lakhs (hundreds of thousands)."

The WTO's members gathered in Geneva last week for what was envisioned as a rubber-stamp approval of the Bali deal, where WTO members agreed on a "peace clause" to allow India's food stockpiling with no penalties until a "permanent" solution by 2017.

But Mr Jaitley said the lack of progress on negotiations meant it was unclear when a permanent solution would be found.

"A permanent solution on food security is a must for us and we cannot wait endlessly in state of uncertainty while WTO engages in an academic debate on subject of food security," Ms Sitharaman also told the parliament.