World Economy

India-US Deal Revives WTO Trade Pact

India-US Deal Revives WTO Trade PactIndia-US Deal Revives WTO Trade Pact

India and the US have resolved their disagreements on food security issues – a major victory for India – paving the way for the implementation of a global trade pact.

The deal to simplify trade procedures was done at a World Trade Organization (WTO) meeting summit in Bali in Indonesia last year, BBC reported.

But India has been blocking implementation of that agreement. It wanted assurances that its food security program would not be challenged under the WTO’s rules.

India’s concern was that complaints based on rules limiting farm subsidies might undermine its spending on food stockpiles intended to ensure that the poor have enough to eat.

Food security programs are covered by a so-called “peace clause” in which countries agreed to refrain for making such challenges until 2017. The US has now agreed to extend that commitment, in effect indefinitely. This bilateral agreement between the US and India still has to be endorsed by the full WTO membership, and it’s likely to be discussed in the Organization’s General Council next month.


The breakthrough stems from a bilateral summit in September when Prime Minister Narendra Modi visited the US.

It clears the way for the WTO to press ahead with the Trade Facilitation Agreement that was done in Bali.

Analysts have estimated that that trade deal could add $1 trillion  to the world economy, by reducing the costs of conducting trade by for example simplifying customs procedures.

US Trade Representative Michael Froman said in a statement: “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 Trade Facilitation Agreement.”

The statement also said Delhi and Washington have agreed that India’s food security programs would not be challenged under WTO rules “until a permanent solution regarding this issue has been agreed and adopted”.

  Victory for India

This breakthrough on the issue of food subsidies will be seen as a major victory for India.

Earlier this year, India refused to back the Trade Facilitation Agreement – a key deal which could add $1t to the global economy and create more than 20 million jobs, mostly in developing countries.