NEW DELHI--A day before the deadline for a global agreement to
ease trade restrictions, U.S. officials said they hoped India would
drop its strident objections and allow the deal to move
forward.
U.S. Secretary of Commerce Penny Pritzker said in an interview
in Mumbai with the Press Trust of India that Washington was "very
disappointed" with India's threat to derail the World Trade
Organization pact, but added she remained "optimistic" New Delhi
would change its stance.
India has said it won't sign off on the WTO trade-facilitation
deal, which must be approved by all 160 member governments to take
effect, unless the Geneva-based body loosens restrictions on
countries' ability to subsidize farmers and stockpile food. India
says it needs more leeway to protect its poor citizens.
A spokesman for India's Foreign Ministry declined to comment.
Trade officials didn't respond to requests for comment.
A failure Thursday--the deadline the WTO set when members first
agreed on the trade measures last December--would be a blow to U.S.
officials as they sit down in the Indian capital for an annual
strategic dialogue between the two countries. U.S. Secretary of
State John Kerry arrived in New Delhi Wednesday evening for the
U.S.'s first high-level talks with India's new government.
Indian Prime Minister Narendra Modi and his Bharatiya Janata
Party won a resounding victory in this spring's parliamentary
elections after pledging to reinvigorate the economy and signal to
the world that India is open for business.
But the new government is sticking to its predecessor's position
that India should be allowed to pursue agricultural-support
programs whose scope is limited by WTO agreements.
At issue are India's massive purchases of rice and wheat from
farmers at above-market prices. Part of that grain is kept in
government reserves, and the remainder is sold to needy households
at subsidized prices. But WTO rules currently allow governments to
stockpile food only if they both acquire those stocks and sell from
them at market prices.
New Delhi says its agricultural programs help safeguard growers'
livelihoods and provide affordable nourishment to the country's
millions of poor and vulnerable.
Otherwise, subsidies provided through such programs count toward
an annual ceiling for developing nations of 10% of the value of
total agricultural production. India, home to a third of the
world's extremely poor, according to the World Bank, says
restrictions on "trade-distorting" subsidies amount to an assault
on its ability to provide for its neediest citizens.
Disagreements about India's agricultural policies flared up at a
WTO meeting last December in Bali, Indonesia. India and other
developing nations had proposed to exempt government food
stockpiling from WTO subsidy caps as long as it is specifically
aimed at supporting poor farmers.
WTO members agreed on the package of trade-easing measures that
they need to ratify by Thursday. But consensus on the Indian
proposal was elusive. Instead, the governments agreed that they
would refrain from filing formal complaints against developing
countries' food-security programs for the time being. The members
set a 2017 deadline for a permanent accord on the issue.
"India has a decision to make about where it fits in the global
trading system," Mr. Kerry said in a speech Monday in Washington.
"India's willingness to support a rules-based trading order and
fulfill its obligations will help to welcome greater investment
from the United States and from elsewhere around the world."
The Indian government has budgeted 1.15 trillion rupees ($19
billion) this year for food subsidies, or 6% of total spending. At
the beginning of this month, official reserves of rice and wheat
exceeded 61 million metric tons, more than double the government's
recommended buffer level of 25 million tons.
Those stockpiles are currently being ramped up as India
implements a law, passed last year, that will expand food-welfare
programs to cover a majority of the country's 1.2 billion people.
But mismanagement, inadequate storage facilities and theft prevent
a large share of that food--40% to 60%, according to various
estimates--from reaching the intended beneficiaries.
William Mauldin and Niharika Mandhana contributed to this
article.
Write to Raymond Zhong at raymond.zhong@wsj.com
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