World Economy

Global Trade Pact Within Two Weeks

Global Trade Pact  Within Two WeeksGlobal Trade Pact  Within Two Weeks

The World Trade Organization said there was a "high probability" that a major deal on streamlining global customs rules will be implemented within two weeks after India and the US overcame a key impasse.

"I would say that we have a high probability that the Bali package will be implemented very shortly," WTO Director-General Roberto Azevedo said, referring to the Trade Facilitation Agreement agreed on the Indonesian island, Reuters reported.

"I'm hopeful that we can do it in a very short period of time, certainly within the next two weeks," Azevedo, speaking ahead of a Group of 20 Leaders Summit in Brisbane, said.

India and the US settled a dispute on Thursday that had paralyzed the WTO and risked derailing the reforms, that are seen adding about $1 trillion to global trade.

India had plunged the WTO into the deepest crisis in its 20-year history in July by vetoing a deal on streamlined customs rules due to a lack of progress on its demands to be allowed to stockpile food without observing the usual WTO rules on agricultural subsidies.

That put the WTO's future in doubt just months after it appeared to have overcome decades of stalemate on the issue at a meeting in Bali.

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 was the second at the WTO in as many days, following a US-China pact to cut tariffs on IT products, also billed as a $1 trillion advance.

The US-Indian deal is likely to be hailed as a victory for Indian Prime Minister Narendra Modi, who has stressed the importance of ensuring that its 1.25 billion people have enough to eat.

Modi appears to have avoided the danger that his tough stance would isolate him at his first G20 summit of world leaders which began on Saturday.

The compromise deal included no major revision of the original WTO deal struck last December, which provided for India's food stockpiling to be shielded from legal challenge by a "peace clause".

A food security law passed by India's last government expanded the number of people entitled to receive cheap food grains to 850 million.

In a recent disclosure to the WTO, India said its state food procurement cost $13.8 billion in 2010-11, part of the total of $56.1 billion it spends on farm support. Wheat stocks, at 30 million tons, are more than double official target levels.