India in the Cross-Hairs of the Obama Administration on WTO
August 1, 2014 • 10:22AM

Both U.S. Secretary of State John Kerry and Commerce Secretary Penny Pritzker are in New Delhi exerting pressure on the administration of Prime Minister Narendra Modi, to get it to make a compromise and support WTO's Trade Facility Agreement (TFA). According to the Bali Agreement, the TFA must be approved by midnight July 31. Kerry will be meeting Prime Minister Modi on Aug. 1, and it is almost a certainty that the WTO issue will feature prominently in their discussions.

India has been insisting for weeks that it will not sign off on the Bali pact unless the group comes to an accord on exempting food subsidy and stockpiling programs like India's from WTO rules. The Bali meeting had produced a truce: WTO members agreed not to file complaints against India's food subsidies for the time being, and said a permanent solution would be found by 2017. India says it will not go along with the TFA unless the permanent solution is written in now. New Delhi points out that the language in the present draft is vague and doesn't explicitly say the interim agreement will continue beyond a 2017 deadline penned in at the Bali meeting. If the truce is called off, India could be subjected to sanctions because of its violation on the food subsidy clause.

Both Kerry and Pritzker indicate that they are hopeful that a "solution" can be found whereby the TFA will get signed—maybe not tonight but within a couple of days. "There's been a real effort to try and find a common ground, because going forward is really in the best interest of all the members of the WTO, and particularly for India," Pritzker told the NDTV network. Keith Rockwell, a WTO spokesman, said the group's director-general was "working hard to find a solution that would be acceptable to all members." Kerry said the deal struck in Bali includes food security, and said India would miss an opportunity if it doesn't agree to the terms. "Right now India has a four-year window where it is given a safe harbor, nothing happens," Kerry told NDTV. "If they don't sign up and be part of the agreement, they will lose that and then be out of line or out of compliance with the WTO."

As of now a number of possibilities are being discussed to break the logjam. To begin with, India will make a compromise and allow delaying of its demand. A second possibility is to go along with the TFA with India remaining out of it. That would cause a precedent and violation of the WTO rule which calls for consensus. The third possibility is to delay the signing a few days to allow India to come in with a deal.

Meanwhile, in Washington, U.S. Trade Representative Mike Froman, in his remarks at the Brookings Institution on July 30, did not directly identify India as the one blocking TFA, but his reference was only towards India and the few other countries like Cuba, Bolivia, Venezuela, and Ecuador, which have supported New Delhi's stand for delay in adoption of TFA. "Unfortunately, a couple of countries now appear to be revisiting their commitment to implement the WTO Trade Facilitation Agreement later this week," Froman said.