India and the United States said Thursday they have resolved a row over food subsidies that has been blocking a landmark global trade agreement.
The New Delhi government refused to endorse the Trade Facilitation Agreement (TFA) in July unless its food stockpiles were exempted from possible punitive measures, prompting Washington to accuse it of taking the World Trade Organization "to the brink of crisis".
But on Thursday both sides agreed India's food security programmes would not be challenged under WTO rules "until a permanent solution regarding this issue has been agreed and adopted", a US government statement said.
The White House said the deal would "unlock progress toward the full and immediate implementation of the WTO Trade Facilitation Agreement, which will lower the costs of trade for developed and developing countries".
India said it was "extremely happy that India and the US have successfully resolved their differences relating to the issue of public stockholding for food security purposes".
"This will end the impasse at the WTO and also open the way for implementation of the Trade Facilitation Agreement," India's Commerce Minister Nirmala Sitharaman said in a statement.
"We are confident that the membership will take the matter forward in the WTO in a constructive spirit."
WTO Director-General Roberto Azevedo has been tirelessly campaigning to save the deal, which would streamline global customs procedures, and, he claims, create billions of dollars in benefits each year.
- Negotiations 'paralysed' -
Last week, he said the impasse had "effectively paralysed the multilateral negotiations in the organisation", calling it the "most serious crisis the WTO has faced".
India's new Prime Minister Narendra Modi discussed the issue with US President Barack Obama when he visited Washington in September, raising hopes of a breakthrough.
New Delhi's decision in July to hold up the landmark deal to reduce trade barriers came after the WTO's members agreed at a December, 2013 meeting in the Indonesian island of Bali to implement the pact.
India and its supporters in the developing world have argued that food stockpiling is essential to ensure poor farmers and consumers survive in the cutthroat world of business.
"Many countries saw merit in what we were asking for," Sitharaman said on Thursday.
"India was not alone or isolated. Others were simply not speaking up."
But stockpiling and subsidies for the poor are considered trade-distorting under existing WTO rules.
Western countries, led by the United States, have raised concerns that such stocks could leak on to global markets, skewing trade.
After Thursday's announcement, US Trade Representative Michael Froman expressed confidence that the Bali agreement could be finally sealed.
"On the basis of this breakthrough with India, we now look forward to working with all WTO members and with Director-General Roberto Azevedo to reach a consensus that enables full implementation of all elements of the landmark Bali Package, including the Trade Facilitation Agreement," Froman said.
At the time of the Bali accord, WTO members agreed on a four-year "peace clause" to protect India from being punished over subsidies and stockpiles until a "permanent" solution" was reached.
The agreement was due to take effect in mid-2015.
But after the Bali pact, Indian officials complained there were nearly two dozen meetings on the trade facilitation pact and just a handful on subsidies.
Bali was the first multilateral agreement concluded by the WTO since its inception in 1995.
It also signalled the first concrete progress on the Doha Round of trade liberalisation talks, launched in 2001 and aimed at underpinning development in poorer nations.
It took nearly a decade to conclude the trade facilitation part of the talks, which began in 2004.