India, US agree on food stockpiling, subsidy

India can continue stockpiling foodgrain for its massive food security programme with the US on Thursday extending its support to New Delhi on food subsidy issue at the World Trade Organisation (WTO) until a permanent solution is found.

The US had earlier opposed stockpiling and food subsidies saying it could distort global trade. This will end the impasse at the WTO and also open the way for implementation of the Trade Facilitation Agreement (TFA).

As per the proposal, India will be provided immunity against penalty for breaching the food subsidy cap of 10 per cent under the current WTO rules.

According to WTO norms, a developing nation can provide food subsidy up to 10 per cent of its total agricultural production. “We are extremely happy that India and the US have successfully resolved their differences relating to the issue of public stockholding for food security purposes in the WTO in a manner that addresses our concerns,” Commerce Minister Nirmala Sitharaman told reporters.

“The WTO General Council has to consider India’s proposal,” she added. The minister also attributed the success to Prime Minister Narendra Modi’s visit to the US in September.
“After the prime minister’s visit to the US, there was greater understanding of India’s position,” the minister said. She, however, did not divulge the details of the agreement between the two nations.

In a statement, US Trade Representative Michael Froman said: “On the basis of this breakthrough with India, we now look forward to working with all WTO members and with Director-General Roberto Azevedo to reach a consensus that enables full implementation of all elements of the landmark Bali Package, including the TFA.”

“The agreement announced today (Thursday) between the US and India paves the way for full implementation of the WTO’s TFA, the first multilateral trade agreement to be concluded in the history of the WTO. The agreement also reflects shared understandings regarding the WTO’s work on food security,” he added.

In July, India refused to back the TFA maintaining that its food security programme benefiting a vast majority of its poor were non-negotiable.

The 10 per cent food subsidy cap would have hindered India’s food procurement programme under which it buys grain from  farmers at higher than market rate and sells to poor at subsid­ised prices besides stockpiling.

Developed countries led by the US have time and again raised concern that stockpiling and subsidies could distort trade. Having cleared the hurdle, India urged WTO members to take the proposal forward in the meeting of the organisation’s highest decision making body– the General Council–to review the proposal.

The meeting is expected to take place on December 10-11.Getting the US and the WTO on the same page on India’s food stockpiling comes ahead of the G-20 summit in Brisbane, Australia, this weekend in which Modi is expected to take part.