India and the United have resolved their disagreements on food stock holdings, clearing the way for passage of the biggest trade deal in the World Trade Organization’s 19-year history.
The two countries agreed that India will extend the world’s biggest food subsidy program until a permanent solution is reached, Bloomberg News reported on Thursday.
India in July blocked part of the WTO deal because it was unclear if the program could continue beyond a 2017 deadline.
“India and the US have successfully resolved their differences relating to the issue of public stock holding for food security purposes in the WTO in a manner that addresses our concerns,” Indian Trade Minister Nirmala Sitharaman told reporters in New Delhi. “This will end the impasse at the WTO and also open the way for implementation of the trade facilitation agreement.”
The announcement gives new life to the WTO after repeated setbacks at reaching a global agreement raised questions about its effectiveness, the report said. The trade body estimates that the agreement would stimulate the world economy by US$1 trillion.
In a statement, US Trade Representative Michael Froman said the WTO deal would reduce the cost of trade by about 10 percent for developed countries and 14 percent for developing countries by removing delays at border crossings.
Indian Prime Minister Narendra Modi is expected to meet US President Barack Obama at the Group of 20 summit in Australia later this week.
The agreement would shield India’s stockpiles for food security from a legal challenge even if the program distorts trade and exceeds India’s agreed subsidy limits, according to the WTO.
India last year allocated 1.25 trillion rupees (US$20 billion) for its public food distribution system to help more than two-thirds of its 1.2 billion people who eat less than the minimum target set by the government, Bloomberg said.
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