NEW DELHI: After being in deep freeze for over three months, a global trade deal is finally in sight with the US and the European Union showing signs of accepting India's demand for providing flexibility to developing countries in fixing minimum support price for farm products. In return, India will sign the stalled international treaty on easier customs rules once an agreement on the contentious food security issue is reached at the World Trade Organization (WTO).
"India, US and EU are close to some understanding and based on this understanding they will work for a final solution at the WTO," said a source, who did not wish to be identified. Senior commerce department officials are engaged in consultations in Geneva. There are indications that the developed countries will agree not to challenge any breach in food subsidy caps till the calculation formula is reworked.
Global trade talks have been deadlocked after India refused to agree to a trade facilitation agreement to usher in easier rules for goods to flow through ports and airports without its concerns on food security being addressed. Based on current rules, several developing countries are close to breaching the cap on 10% value of production and face the threat of punitive action at WTO. India has argued that the calculation is flawed as it is based on outdated prices and has demanded that formula be reworked.
At the Bali ministerial meeting last December, WTO members had agreed to address India's concerns over a four year period, during which no disputes would be raised at the multilateral body even if the subsidy cap was breached. At the Indonesian island the ministers had also agreed to sign the agreement on customs rules by July 31. The developed world had argued that the rules would provide a $1 trillion boost to a sluggish global economy and pave the way for reviving the 13-year-old Doha dialogue.
Despite being blamed for "blocking" a global trade deal, India has stuck to its stand. But in recent weeks, officials have indicated that India is willing to settle for a clause that extends the four year "peace clause" to perpetuity — something that is learnt to have been discussed during a meeting between Prime Minister Narendra Modi and US President Barack Obama.
The reports of a settlement at WTO come two days after Modi met ministers and top commerce department officials on Monday. On Monday, sources had then described it as a "review meeting" and had suggested that no firm offers were on the table.
Sources said finance minister Arun Jaitely had taken up the issue and argued India's stand with US secretary of state John Kerry, when he had visited New Delhi in late July. After hearing the government's argument, Kerry had no answers and described it as "reasonable". There was, however, immense pressure on the Obama administration from domestic lobbies in the US. This was evident when a US official, who was part of Kerry's delegation, tried to resile from his position.
Washington had indicated its "appreciation" for New Delhi's posture during last month's meeting between a top USTR official and commerce & industry minister Nirmala Sitharaman. Similarly, UK chancellor George Osborne had shown support for India's stand, the source said.
