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Maize production in India

India and the US are backing away from a fight over food security and a new Indian food distribution programme for the poor that had been seen as a big stumbling block to reaching a global trade deal this year.

Roberto Azevêdo, the new head of the World Trade Organisation, called on member countries last week to break a deadlock in negotiations towards a three-pronged “Doha lite” agreement due to be signed at the trade body’s biennial ministerial meeting in Bali in December.

A stalemate on food security had been seen as one of the main threats to such a deal, which is also due to tackle removing customs red tape around the world and increasing development assistance to poor countries.

India had been accused by others of holding the Bali package “hostage” to the food security negotiations. But a series of high-stakes meetings of ambassadors launched late last week by Mr Azevêdo have generated at least initial wins for the Brazilian.

Rather than both sides shaping up for a fight over how big government food-buying and distribution programmes for the poor are administered, the consensus has moved towards negotiating the terms of a “peace clause”. This would see negotiations continue for a set time, during which critics of the Indian and other programmes agree not to file a case challenging them to the WTO. The compromise was first proposed by China at a meeting this month.

“The past 10 months felt like ritual dance. The last two days felt like we were really trying constructively to reach a deal,” one participant said on Friday. “It is a real substantive negotiation now.”

India and fellow members of the G33 group of developing nations have made securing a WTO deal to allow government food-buying and distribution programmes for the poor a priority this year. They argue that developing countries need greater flexibility than allowed under WTO rules in setting the prices they can pay to poor farmers and what governments can do with any surplus grains.

The issue is particularly sensitive in India. Facing elections next year, the Congress party-led government made a big push this summer to get parliamentary approval for new food security legislation that will see the country’s food subsidy bill jump to $22bn annually, and the number of Indians entitled to subsidised food increase to two-thirds of its 1.2bn population.

But the programme – and others like it in places such as Thailand, where the government has increased substantially the amount of rice it buys from poor farmers – has become one of the biggest areas of contention in the WTO negotiations in Geneva.

In the negotiations, the US and other rich countries have argued that government food security programmes can distort commodity markets when the surplus from government stockpiles is exported, or sold on the open market. They have also questioned how transparently prices are set for those programmes.

Participants stressed that key terms of a “peace clause” still had to be negotiated, including how long it would apply for, and how it would be monitored. But the shift in rhetoric was at the very least a signal of the new tone in Geneva since Mr Azevêdo took over as WTO director-general this month.

“The tempo of the discussions is different; the essence of the discussions is different,” one participant told the Financial Times.

Another person familiar with the meetings said: “People are reasonable and seemingly keen to find common ground . . . [It is] a very, very different kind of conversation from what we have seen in the last five years.”

In an interview with the FT before last week’s meetings, Mr Azevêdo said he hoped to conclude a first round of negotiations by Wednesday and a second round before the Asia-Pacific Economic Cooperation meeting of Pacific-rim leaders takes place in Bali in early October.

After that meeting – and the International Monetary Fund/World Bank annual meetings that follow – there will be only six weeks left to finalise a deal to take to the December 3-6 WTO ministerial meeting in Bali.

“Technically, we do not have much time, which means we cannot be doing things that are extremely complex from a technical standpoint,” Mr Azevêdo told the FT. “It has to be very straightforward.”

The Brazilian has said that failure to reach a deal in Bali would be a significant blow to the credibility of the WTO, which critics argue may have outlived its usefulness as a forum for trade negotiations.