Due to lack of progress on food security to help India’s poor, India has refused to accept the World Trade Organization’s, or WTO, trade facilitation agreement. This deal was achieved in Bali in December 2013 and India’s refusal prevents the adoption of the Bali agreement.

India’s refusal has been criticized by trade officials around the world. Diplomats have noted that it may hamper the WTO’s Doha Round of trade negotiations.

Indian Prime Minister Narendra Modi and his Bharatiya Janata Party won a decisive victory in the spring election where they promised to develop the economy and tell the world that India is welcoming to business.

However, the new government is sticking by its previous position that the WTO is limiting their agricultural support programs.

Food security is important concern for India’s poor because 450 million people in India survive on less than $1.25 per day. The government has been arguing that the value of subsidies for food stockpiles has to be changed to more than 10 percent of a country’s total food production.

Indian Finance Minister Arun Jaitley said that the issue of food security is critical for the country’s small farmers. India’s position on the trade facilitation agreement is probably due to political pressure from India’s poor.

India’s government argues that wheat and rice are more expensive than market prices. Their agricultural programs protect farmers’ livelihoods and provide reasonably priced nutrition to India’s poor and vulnerable. However, WTO rules only allow governments to stockpile food if they acquire those stocks at market prices.

The Bali agreement will only take effect if it is approved by all 160 member governments. Unless the World Trade Organization relaxes restrictions on a countries’ ability to subsidize farmers, the agreement will not come into effect.

“India has a decision to make about where it fits in the global trading system,” John Kerry, U.S. Secretary of State, said. “India’s willingness to support a rules-based trading order and fulfill its obligations will help to welcome greater investment from the United States and from elsewhere around the world.”

– Colleen Moore

Sources: Gulf Today, Washington Post, Wall Street Journal
Photo: Washington Post