A meeting of trade ministers of the Group of twenty (G20) major economies to pressure India to accede to a breakthrough global trade pact seems to have failed as India stood its stance not to implement the Trade Facilitation Agreement without its concerns regarding its food security programme being adequately addressed.
Advanced western economies consider implementation of the Trade Facilitation Agreement – which faces a 31 July deadline – as key to progress in global trade talks under the World Trade Organisation and the deadlock over the food trade issue has thrown a shadow over whether consensus could be achieved.
For the West and the developed economies of the East implementing the measures to facilitate trade is necessary to boost growth by 2 per cent over five years. They are in no mood to dilute their stance on the so-called food subsidies, which they articulate as farm subsidies.
India stockpiles food for its poor, they argue, anjd is at risk of breaking current WTO rules. In Bali, WTO members agreed to give India more leeway until 2017, while negotiating a permanent solution.
A deal was only reached after New Delhi extracted promises that its concerns related to food subsidies would be addressed.
India, which has been most vociferous in its protest against the self-serving western policies, had managed to eke out some concessions on the food security issue at the Bali ministerial of the WTO. It is angry at rich countries for failing to address developing countries' concerns about a deal on trade facilitation - struck by WTO member states in Bali last year.
Proponents of the Trade facilitation Agreement say the deal could add $1 trillion to global GDP and 21 million jobs, but India and other developing countries are worried about possible loss of jobs and a big hit in their GDP levels.
India's commerce ministry said on Wednesday it would ''find it difficult" to support the protocol unless it was satisfied that adequate emphasis is being placed on negotiations about food security and other issues important to poor countries -sparking furious negotiations at the G20 trade ministers meeting in Sydney.
Officials involved in the negotiations say the erratic behavior on the part of the Indian trade team made it difficult to trust. India, they say, also did not provided any clear description of exactly what changes it would like made to the agreement.
The Indian demands appear to have shaken confidence in the pro-business credentials of the new government of Narendra Modi, who came to power earlier this year
Australian trade minister Andrew Robb said assurances had been given to all of the signatories to the treaty that their concerns would be met and expressed optimism that it would be resolved before the deadline.
"There was strong resolution around the table that India's issues to do with food security would and should and will be addressed as decided previously and I think there will be discussions about how to satisfy the Indians and they won't be left behind," Robb told reporters.
The row over subsidies has raised fears that the so-called "trade facilitation agreement", the first ever global trade agreement under the World Trade Organization, will be derailed.
"We are focused on implementing the full Bali package that will deliver for every country involved," said Michael Froman, the US Trade Representative. "Reinvigorating the multilateral system is too important to put at risk with any backsliding on commitments."