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Modi drives WTO bargain with Kerry
Hint at faster food talks

John Kerry greets Narendra Modi in New Delhi on Friday. (AP)

New Delhi, Aug. 1: The US for the first time today hinted at willingness to speed up WTO negotiations on food security to “unblock” New Delhi’s opposition to a key trade pact, after a meeting between Prime Minister Narendra Modi and secretary of state John Kerry.

Kerry repeatedly told Modi that India’s move to block the WTO agreement would send “confusing signals” to a world community excited by the Indian leader’s promise to open up the economy to foreign investments, US and Indian officials independently confirmed.

But Modi responded that his government could only back the WTO’s trade facilitation agreement (TFA) if the global body simultaneously hastens negotiations on food security. The stand, spelt out during the hour-long meeting, appeared to have prompted the US to grudgingly consider India’s demand.

“The main concern the Prime Minister seemed to be putting out is that they wanted some degree of simultaneity of having TFA and food security issues move forward together,” a senior US state department official said in a media briefing after the meeting. “I think that’s where perhaps there is some movementů of trying to move forward with their (India’s) concerns on food security at a faster pace that would allow them to unblock their concerns on TFA implementation.”

Officials — both Indian and American — cautioned that all the Modi-Kerry meeting had achieved was to create an opening for the nations on a subject that has triggered public accusations and counter-accusations, and has clouded Kerry’s visit to India for a bilateral strategic dialogue.

That opening, the officials said, would need to be built on by trade negotiators of both nations over the next few weeks for a lasting breakthrough on the dispute ahead of Modi’s scheduled visit to Washington in September-end for a summit with US President Barack Obama.

But if the opening created today does deliver a breakthrough, Modi will have registered a major early victory in economic diplomacy, an element of foreign policy he has highlighted as a focus area repeatedly.

The dispute revolves around two WTO agreements — one inked in Bali last December, and the other the trade pact that was to be signed by July 31.

At Bali, India and several other developing nations including China and Indonesia — still largely agrarian economies vulnerable to the vagaries of rain — demanded a pact exempting them from a WTO rule that bars members from stockpiling more than 10 per cent of food produce. Excessive stockpiling, the WTO argues, artificially skews global food prices.

India and its allies argued at Bali that only an exemption agreement would make them willing to sign a second, trade facilitation, agreement.

After negotiations that went down to the wire, the WTO agreed to an agreement that sought to exempt India and other nations from the 10 per cent rule for four years, and promised further talks to decide on the future of the exemption after that period.

But India and other developing nations argued at Geneva, where the WTO met this week to seal the TFA, that the body had not moved at all on its promised talks on the future of the food security exemption. WTO agreements need a consensus among members, and with no breakthrough, negotiators broke up talks last night.

Kerry articulated US concerns to his Indian counterpart Sushma Swaraj, and US commerce secretary Penny Pritzker — who is travelling with Kerry — reiterated Washington’s opposition to India’s position when she met commerce minister Nirmala Sitharaman yesterday.

Today, they repeated those concerns when they met Modi, citing the Prime Minister’s own pro-trade track record.

“The secretary (Kerry) noted that as the Prime Minister is very focused on this signal of being open for business and on creating opportunity, that the failure of implementing the TFA sends a confusing signal and undermines the very message that India is seeking to send,” the state department official said.

Modi responded not by bluntly refusing to negotiate, but by suggesting to Kerry a possible solution to the impasse that affects trade rules across the world.

“The Prime Minister emphasised the need for developed countries to understand the challenges of poverty in developing countries and their governments’ responsibilities in addressing them, when discussions take place in international forums,” the Prime Minister’s Office said in a statement on the meeting with Kerry and Pritzker.

That possible solution — parallel talks on the future of the 10 per cent exemption and on the TFA — had been discussed by trade negotiators in Geneva. But coming from the Prime Minister, the suggestion pointed to a political attempt to break the deadlock. That was a signal Kerry, a long-time senator who was the 2004 Democratic Party presidential nominee, appears to have understood.