Not opposed to trade facilitation pact at WTO: Arun Jaitley

NEW DELHI: The government on Wednesday said it was not opposed to the trade facilitation pact at the World Trade Organisation (WTO) but wants the 'peace clause' to continue till a permanent solution to the issue of public stockholding of food is found.

"Please agree to the peace clause coexisting with the settlement of the dispute. That's all," Finance Minister Arun Jaitley said at the World Economic Forum's India Economic Summit in Delhi, blaming the developed countries for "unreasonable posturing".

India had stalled signing of the trade facilitation agreement in July, demanding that the other deliverables of the December 2013 Bali ministerial, namely the issue of public stockholding for food security, be addressed simultaneously.

Under the peace clause, a World Trade Organisation member was not to not face action from other member-country if it breached the 10% limit of total output for a particular produce.

There was some misunderstanding about this clause agreed at the Bali ministerial that the developed world interpreted as a four-year moratorium while countries like India saw it as an open-ended relief till a permanent solution was found.

The Narendra Modi government sought more clarity and refused to sign the trade facilitation agreement when the open-ended assurance did not come.

"India is certainly not opposed to trade facilitation. Let me make it very clear... We are agreeing to a multilateral arrangement on trade facilitation but please keep the peace clause alive till the dispute is settled with regard to the stock holding," the finance minister said.

"The peace clause would vanish in four years. Now all that we have requested is the settlement of dispute with regard to the food stock holding and the peace clause must continue to coexist. Therefore, till you resolve that issue, India should not be taken to the dispute redressal mechanism. The peace clause must coexist," he said. "So the dispute is not with regard to trade facilitation. Trade facilitation has become a victim because of unreasonable posturing by some countries," he said, pointing out that while a schedule was fixed for the trade facilitation pact, no time frame was prescribed for a decision on food stock holding.

"It may take a much longer time to arrive at that arrangement but the peace clause and the impact of the peace clause in simple language is that if India does not restrict its food stock holdings, it will be taken to dispute mechanisms at the WTO," he said.

He said India's stand was being positioned as some kind of ideological opposition to the trade facilitation, which is not the case. "Even if there was no WTO, we probably would be doing trade facilitation within India," he said.

Jaitley also pointed out that subsidy was calculated on the prices of 1986-87, which was unreasonable.

Though India's subsidies are below the limit, there is a risk once the food security law is rolled out, it could breach the limit particularly in the case of rice, which could invite action from members if the peace clause issue is not settled.

Jaitley reiterated the government would protect interest of farmers.

He said the restriction on the extent of food stock holdings would mean "Indian government not being able to buy from its own farmers and foodgrains from elsewhere coming in, increasing the number of suicides, which our farmers in India are being compelled to because of indebtness," he said.