India ready to block WTO deal at Bali

Won't Compromise On Food Subsidy, Willing To Take Blame For Failure New Delhi:The government on Thursday decided that it will refuse to accept any deal at the World Trade Organization's (WTO) Bali meeting that does not protect its right to offer subsidized food, even if resulted in India being blamed for blocking progress. The tough posture ahead of next week's ministerial meeting was endorsed at the Union cabinet meeting chaired by Prime Minister Manmohan Singh after WTO members failed to agree to India's demand for a restriction on any disputes at the multilateral body in case the 10% subsidy cap is breached.      India wants the interim solution or the "peace clause" to be in place till a permanent solution is found. But, WTO members, led by the US, are willing to offer truce only for four years, while promising to work out a final solution during this period, something that the government is not convinced about.      Under current rules, amount spent on purchase of foodgrains at the minimum support price and sale at subsidized rates through the public distribution system cannot exceed 10% of the value of production. India fears that it may go past the limit once the Food Security Act is fully implemented. India is a key member of the G-33 alliance, which also includes China and Indonesia, which are seeking a change in the rules for calculation of subsidy.      The commerce department has suggested two options to the cabinet but the government decided that it will not agree to the proposed agreement on trade facilitation if India's interests on food security were not protected. "Since India has consistently insisted on balance in the Bali package, it may not be desirable to endorse the Trade Facilitation Agreement (TFA)," said a source, quoting the cabinet note. TFA is meant to ease shipment of goods across the border by simplifying customs procedures and speeding up clearances.      Apart from insisting on a permanent solution to the food security issues, G-33 also wants an exemption from any dispute at the WTO for violation of the agreement on subsidies and countervailing measures. Although developed and several developing countries enjoyed protection from facing penalties for selling subsidized food in other markets, which impacted goods from other countries, the benefit ended in 2004.  TALKING TOUGH      Govt wants no disputes at WTO till permanent solution to the 10% cap on food subsidy is found      To seek an exemption from any disputes under the subsidies agreement      India will only sign proposed Trade Facilitation Agreement if demand on food security is met