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India Set to Block WTO Trade Facilitation Pact

Posted July 23, 2014

After weeks of sending mixed messages, the government of India now appears most likely to block the World Trade Organization’s (WTO) eagerly-awaited Trade Facilitation Agreement (TFA) in a bid to safeguard its interest on food stockpiling and grain subsidies. A cabinet meeting chaired by newly elected Prime Minister Narendra Modi re-scheduled for Thursday is expected to definitively spell out India’s stance on the contentious issue.
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In the meantime, press reports cite senior government officials as saying India will not support a trade protocol ahead of a July 31 deadline unless concerns about its food subsidies are met. “We have no problem with this trade facilitation, but unless they agree with us we will not allow it to happen,” one source told the Reuters news agency. “They want to cap our subsidies, which are just a fraction of what the developed countries are giving to their rich farmers.”

India has come under intense pressure from the United States and other developed countries to drop its demands ahead of the WTO meeting in Geneva on Thursday, where member states hope to adopt the protocol — a key step before the TFA is ratified.

As well as causing concern abroad, New Delhi’s tough stance has been criticized by a leading industry group in India and surprised those who expected the pro-business Modi to radically slash the subsidy program. The position however is consistent with that of Modi’s party while in opposition when it was fiercely critical of the agreement, saying India should not have settled for anything less than a total exemption for its food security program.

India has a history of resorting to brinkmanship to get its way at the WTO, including in Bali last December where hardball tactics secured a four-year respite for its food subsidies. If India’s refusal to back the protocol derails the trade facilitation deal, critics say, it could lose the temporary reprieve and face punitive sanctions.

Related: Global Trade Facilitation Agreement Running into Trouble Ahead of Deadline?