What is trade facilitation?
The trade facilitation decision is a multilateral deal to simplify customs procedures by reducing costs and improving their speed and efficiency. It will be a legally binding agreement and is one of the biggest reforms of the WTO since its establishment in 1995. The TFA will come into existence once two third of the WTO members ratify it. As on January 24, 2016, sixty four countries out of the 162 WTO members ratified it.
The objectives of Trade Facilitation Agreement are: to speed up customs procedures; make trade easier, faster and cheaper; provide clarity, efficiency and transparency, reduce bureaucracy and corruption, and use technological advances. It also has provisions on goods in transit, an issue particularly of interest to landlocked countries seeking to trade through ports in neighboring countries.
It is expected that once customs procedures on imports and exports are simplified, it will quicken international trade volume.
What is its significance?
Significance of the Trade Facilitation Agreement is that it is the first major new agreement reached by the member countries after the establishment of the WTO in 1995. Because of the conflicting stand of the member countries on different issues, no noticeable agreement was reached before the Bali MC except few less important ones like that on financial services, IT products, and on telecommunication.
The TFA has made the WTO a significant institution for promoting trade liberalization. It was one of the three components of the ‘Bali Package’.
Part of the deal involves assistance for developing and least developed countries to update their infrastructure, train customs officials, or for any other cost associated with implementing the agreement.
It is expected that after the implementation of the TFA, it will give a benefit between $ 400 billion and $1 trillion to the world economy by reducing costs of trade by between 10% and 15%. Increased trade flows, revenue collection, stable business environment and enhanced foreign investment etc are supposed to be the other benefits of the TFA.
India's stand on TFA:
India backed from its previous
stand, but for better reasons. TFA is most likely to help developed nations though it is projected to help developing and underdeveloped nations better. If the betterment of developing and underdeveloped nations was the major intention, stress should be on passing the agreements on other aspects related to agriculture (food security) and LDC. It seems India backed out for better bargaining power. Had India signed the deal on TFA, there might not arise the urgency to find a permanent solution to food security. The present peace clause will end in 2017, and the new impositions may turn unfavorable to India. Having clubbed food security along with TFA, India now asserts that the Bali Package can be voted only together. Let’s wait and see how things unfold in future.
No comments:
Post a Comment