India might trip on WTO trade facilitation pact

Business Standard, November 29, 2013
There still remain a number of loopholes that developed countries can exercise and not cooperate with India

Even as India’s demand for exchange of information on Customs cooperation has been accepted under the World Trade Organization (WTO)’s Trade Facilitation Agreement (TFA), a number of loopholes remain, and these may provide developed countries escape routes on this front.

According to the final draft of the negotiating texts, seen by Business Standard, there are a few binding commitments in the chapter on TFA, under Article 13, which talks of Customs cooperation. Subsequently, however, these commitments get diluted under the same article, within various provisions such as the provision of information and postponement or refusal of a request.

Article 13 of the TFA stipulates a member country, upon receiving a request, “shall exchange the information” with the importing country “for the purpose of verifying an import or export declaration in identified cases where there are reasonable grounds to doubt the truth or accuracy of the declaration”. For example, if India is importing a particular product from another country, it might seek details of the value shown in the document concerned in case of any doubt and verify the value of its production, as well as the cost of the product in that country.

However, though Article 13 states the country from which details are sought is liable to provide the information, later, under sub-sections of the Article, the draft text states a country will be able to exchange the desired information “to the extent possible”. Under a separate provision on postponement or refusal of a request, it adds, a country may refuse or postpone giving the information if the country’s domestic legal system prevents this. “There are several loopholes within the TFA that will give developed countries various escape routes. This could prove to be detrimental for India and result in dumping,” said a Delhi-based trade expert, on condition of anonymity.

Roberto Azevêdo, director-general of WTO, has said if the TFA went through, it would lead to jobs and opportunities and result in better integration of developing and least developed countries into global trade flows.

Pradeep S Mehta, a member of CUTS International and a former member of WTO’s high-level panel on the future of trade, said, “On trade facilitation, we certainly need reforms in India to reduce transaction costs and get rid of silly non-tariff barriers, and if a WTO agreement can help us to lock in domestic reforms, on a sliding scale, why hesitate? Overall, the multilateral trading system is in our greater interest, instead of a large number of spaghetti agreements.”

This news item can also be viewed at: