At the meeting of the 160-member World Trade Organisation in Geneva yesterday, India demanded a halt to the trade facilitation (TF) timetable till a permanent solution on public stockholding for food security is found.
The meeting was to finalise a deal on TF that was agreed at talks in Bali last December in the WTO's first ever global trade agreement.
Without directly identifying India, the United States expressed its deep disappointment over lack of progress on the TF agreement.
"We are deeply disappointed that backsliding on Trade Facilitation has brought the WTO to the brink of crisis," the US Trade Representative, Mike Froman, said.
India's stand at the WTO was supported by Cuba, Venezuela and Bolivia.
"The current state of play on Trade Facilitation threatens to deal a serious blow to the credibility of the multilateral trading system and to set back the development needs of many countries around the world," Froman said.
Alysa Ayers, a former India hand at the State Department during the Obama Administration, told PTI that she is quite worried about what India's new position on the trade facilitation deal signals about India's direction on trade.
The issue, if not resolved by early next week, has the potential to cast a shadow on a planned visit to New Delhi by US Secretary of State John Kerry, which begins on July 30, observers say.
The Obama Administration refused to comment on the possible impact of India's stand at WTO on the India US relationship. However it is expected to figure prominently during the next week's India US Strategic Dialogue in New Delhi.
"Throughout all of 2013, India was reticent to commit to the trade facilitation package which WTO members had been working on, but in an extended marathon negotiation effort at Bali in December, brokered by the WTO's new Brazilian chief, there was a sufficient compromise reached to meet India's concerns," said Ayers, who is now a research fellow at the Council on Foreign Relations, a top American think tank.
India, she said, is reopening what had been carefully negotiated to the apparent satisfaction of every single WTO member just seven months ago.
"It is hard to understand, especially coming from a new government which in its campaign manifesto emphasized India's pre-Raj global trading prominence," Ayers said, reflecting on the general mood prevailing in the US on this issue.
Ayers, a proponent of strategic partnership between India and the US, said that she is worried about the possible impact TFA would have on the bilateral ties.
"Here is where I worry the most. If indeed the Bali trade facilitation understanding comes undone, with India as the vetoing party, it becomes difficult to foresee any near-term prospect of developing a more visionary economic ambition with India--like supporting India for APEC membership, which I have advocated for, or developing a path to the TPP, or a long-term FTA ambition which some have recommended as a goal," she said.
"That's because the message from the Bali trade deal veto will be that India is not at present prepared to stand with the rest of the open trading world. I hope that isn't the reality, but am worried that's where we will end up," Ayers said.