US, India Reach Deal on Trade Facilitation Agreement

U.S. and Indian trade negotiators hammered out an unexpected deal to move the World Trade Organization Trade Facilitation Agreement forward in Geneva, the Obama administration announced on Nov. 13. India torpedoed implementation of the agreement in late July, but the Office of the U.S. Trade Representative said the two countries struck a deal on Indian agricultural subsidy concerns that proved enough to regain Indian support for the TFA. The meeting of the minds will pave the way for all WTO members to implement the agreement, as well as the entire Bali package, said USTR.

The bilateral deal announced on Nov. 13 exempts “specific food security programs” in some developing countries from WTO challenge until WTO members reach a final deal on hoarding, said USTR (here). The ministerial statement released after the Bali package was agreed said the hoarding programs will be exempt from challenge until the 11th WTO ministerial conference, but later in the statement the ministers say the developing countries will be shielded until a permanent solution is reached on hoarding. The breakthrough between the U.S. and India clarifies the ambiguous language by choosing the latter, less concrete deadline. The White House applauded the breakthrough, as did industry associations, such as the National Association of Manufacturers.

U.S. officials made a “big concession” in extending indefinitely the safeguard mechanism for developing countries, said Gary Hufbauer, a senior trade analyst at the Peterson Institute for International Economics, in an interview following the USTR announcement. A USTR spokesman disputed that insight in a conference call with reporters on Nov. 13. “India actually decided to come back to our position as opposed to us moving to their position,” said the USTR spokesman. U.S. Ambassador the WTO Michael Punke offered to clarify the peace clause in September (see 14091601).

USTR lawyers on the conference call insisted the agreement does not require WTO members to revisit the Bali package. WTO members will vote to approve the U.S.-India bilateral clarification and implementation of the Trade Facilitation Agreement at the next WTO General Council meeting, scheduled for Dec. 10-12 (here).

Many WTO members chide India for an agricultural subsidy program that fuels low-cost exports, said Hufbauer. It’s not clear what food security programs the U.S.-Indian breakthrough will cover, added Hufbauer. “I haven’t seen any defining conditions of food security programs, and that is also a concern of USTR and some environmental groups,” said Hufbauer. “Countries can have a very elastic interpretation of food security. I think that’s a problem area. Food security has never been defined more than simply that it involves food, and not cotton, for instance.”