Trade Facilitation Agreement

  • World Trade Organisation – Nairobi meeting from December 15 to 18.

  • India is likely to ratify the World Trade Organisation’s (WTO) Trade Facilitation Agreement (TFA), aimed at easing customs rules to expedite trade flows

Trade Facilitation Agreement (TFA)

  • The Trade Facilitation Agreement (TFA) was one among the 10 agreements of the deal the WTO members (including India) had agreed upon in December 2013 Bali Ministerial meeting.
  • The TFA seeks to speed up global trade by reforming customs procedures and cutting red tape.
  • The deadline to sign the agreement is July 31 and the deal has to come into force fully by 2015.
  • It is being believed, especially by the proponents of the agreement that deal could add $1 trillion to global GDP and also can generate 21 million jobs by slashing red tape and streamlining customs.
  • The developing country especially India and South Africa wants that before pushing for this TFA thing why WTO don’t discuss and allay our concern on food subsidy which is a lifeline for lakhs of BPL people in these countries.
  • In November last year, WTO member countries had adopted a “protocol of amendment” to make the TFA a part of the overall WTO Agreement. However, the TFA will become operational only after two-thirds of the members ratify it. So far, only 53 of the 162 member countries have done so.
  • New Delhi is planning to ratify the TFA as part of the government’s initiatives to attract more investment by improving India’s ranking in the World Bank’s “ease of doing business” report.
  • The government wants India to leapfrog its position from 130th this year (out of 189 countries) to the top 100 next year and then in the top 50 soon.
  • A Cabinet note on the issue of TFA ratification is being circulated among Ministries for their views.

Concern

  • India might not take advantage of the entire range of flexibilities in the TFA available for similar developing countries to determine which commitment they will implement at what time

What flexibilities

  • The flexibilities are available in the TFA for developing countries
  • They include allowing them to take sufficient time in implementing certain commitments and the provision to seek assistance or support from donor countries for capacity building.

Implications

  • Not using all the available safeguards could lead to greater chances of India finding it difficult to implement all its TFA-related commitments on time
  • Thereby giving opportunities to other countries to drag it (India) to the WTO’s dispute settlement panel
  • For instance if India had already ratified the World Trade Organisation’s Trade Facilitation Agreement (TFA) without taking complete advantage of the leeway available to developing countries, it could have been, for instance, taken to the WTO’s dispute settlement panel by Nepal.
  • Further, given the persisting differences with the developed world on issues of high importance to India, ratifying the TFA so early will result in India losing yet another bargaining chip to secure its interests. The items being championed by India include finding a permanent solution to the issue of public stockholding for food security purposes as well as measures to protect poor farmers from sudden import surges of farm products.
  • Implementing such commitments as part of TFA require not only sufficient time but also a huge amount of investment.

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