The World Trade Organization’s top official said there’s a high chance the global body would soon implement its biggest-ever deal after the U.S. and India broke an impasse on food stock holdings.
The 19-year-old organization will “use this momentum that this breakthrough has created to restore confidence in the WTO and multilateral trading system,” Director General Roberto Azevedo said in a briefing in Brisbane today. He said he’ll consult with all WTO members to “collectively and finally resolve the impasse as quickly as possible.”
The two countries agreed that India will extend the world’s biggest food subsidy program until a permanent solution is reached, according to a U.S. statement yesterday. India in July blocked part of the WTO deal because it was unclear if the program could continue beyond a 2017 deadline.
The WTO estimates the deal will stimulate the global economy by $1 trillion by removing delays at border crossings. The U.S.-India agreement was reached before the country’s leaders are expected to meet at the Group of 20 meetings in Australia that start tomorrow.
“Implementation of the Trade Facilitation Agreement of the WTO will help a great deal,” Anupam Shah, chairman of India’s Engineering Export Promotion Council, said in an e-mail yesterday. “The TFA will bring in uniform standards at customs and port clearance and help us achieve fast turnaround time.”
The India-U.S. agreement will reduce the cost of trade by about 10 percent for developed countries and 14 percent for developing countries, according to U.S. Trade Representative Michael Froman.
Next Steps
“Now, we are looking forward to take the next steps on the implementation of all the elements of the Bali package, notably the immediate adoption of the Trade Facilitation Protocol due by July 31,” the European Union’s Trade Commissioner Cecilia Malmstroem said in a statement yesterday.
The Bali agreement would shield India’s stockpiles for food security from a legal challenge even if the program distorts trade and exceeds India’s agreed subsidy limits, according to the WTO. India last year allocated 1.25 trillion rupees ($20 billion) for its public food distribution system to help more than two-thirds of its 1.2 billion people who eat less than the minimum target set by the government.
India saw the language in the present text as vague, arguing that it doesn’t explicitly say an interim agreement on food stocks will continue beyond a 2017 deadline to reach a permanent solution.
“The Bali package can now be implemented since India and the U.S. had contrasting positions and there is a convergence now,” said N.R. Bhanumurthy, an economist at the National Institute of Public Finance and Policy, a government-backed research institute in New Delhi. “Developed economies are keen on increased trade as recovery in their economies is not strong.”