By Raymond Zhong
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 the
ability of countries 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 to comment.
A failure Thursday--the deadline the WTO set when members first
agreed on the trade measures in 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 on 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.
New Delhi says its agricultural programs help safeguard growers'
livelihoods and provide affordable nourishment to the country's
millions of poor and vulnerable. But WTO rules currently allow
governments to stockpile food only if they acquire those stocks,
and sell from them, at market prices.
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 in 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 July, official reserves of rice and wheat exceeded
61 million metric tons, more than double the government's
recommended buffer level of 27 million tons.
Those stockpiles are 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
Corrections & Amplifications
The Indian government's recommended buffer level for rice and
wheat reserves is 27 million tons. An earlier version of this
article incorrectly reported the figure as 25 million tons. (July
30, 2014.)