U.S., India end dispute on food security, clearing way for major trade deal

The U.S. and India agreed Thursday to end a dispute over food security and subsidies, potentially clearing the way for a major new multilateral trade deal.

Under the agreement, announced as President Obama is in Myanmar for the annual Association of Southeast Asian Nations Summit, the U.S. and other members of the World Trade Organization (WTO) will allow India to continue its policy of stockpiling food to feed its poor.

WTO members have previously taken issue with the policy, saying India’s disproportionately high levels of government support to food producers distort market forces and global trade by encouraging over-production. India and the U.S. agreed that India’s current system can continue until a permanent solution is found.

The dispute had been holding back negotiations on the WTO’s trade facilitation agreement, a major multilateral trade deal that would be the largest in the WTO’s two-decade history. Until now, negotiations on the agreement included specific caps on government subsidies to food producers, which India objected to.

With that dispute out of the way, the trade facilitation agreement appears to have new life.

“This will end the impasse at the WTO and also open the way for implementation of the trade facilitation agreement,” said Indian Trade Minister Nirmala Sitharaman, as quoted by Bloomberg.

Obama administration officials cast the deal as a major breakthrough and one that could breathe new life into the WTO.

“With the WTO confronting a mounting crisis of confidence, President Obama and [Indian] Prime Minister Modi held productive discussions on this issue, including during the Prime Minister’s visit to Washington in September,” said U.S. Trade Representative Michael Froman. “In recent days, officials of both governments worked intensively and reached an agreement that should give new momentum to multilateral efforts at the WTO. In doing so, the United States and India reaffirm their joint commitment to the success and credibility of the WTO.”

Mr. Froman also cast the deal as one piece of a successful week for the U.S. on the trade front.

Earlier in the week, the U.S. reached an agreement with China to extend visa validity between the two countries. Both nations say they’ve also made significant progress on a deal to remove tariffs on many high-tech products.

Negotiations also are continuing on the Trans-Pacific Partnership, a major multilateral trade deal that would include a dozen Pacific Rim nations.