Govt nod to ratify Trade Facilitation Agreement

The WTO agreement aims to simplify customs regulations for the cross-border movement of goods

The Union cabinet on Wednesday approved a proposal to ratify the Trade Facilitation Agreement (TFA) of the World Trade Organization, which aims to simplify customs regulations for the cro-ss-border movement of goods.

To facilitate both domestic coordination and implementation of the TFA provisions, a National Committee on Trade Facilitation will be set up; it will be jointly headed by the commerce and revenue secretaries.

The TFA contains provisions to speed up the movement, release and clearance of goods, including goods in transit. It also sets out measures for effective cooperation between customs and other appropriate authorities on trade facilitation and customs compliance issues.

“These objectives are in consonance with India’s ‘ease of doing business’ initiative,” a cabinet statement said.

The provisions that each country needs to implement have been divided into three categories. Under category A, developing countries would put items that they can immediately implement, while under category B items, they can seek a transition time. Under category C, they can seek financial assistance from developed countries to implement the provisions.

Commerce minister Nirmala Sitharaman said India has put around 152 items under category B out of 265 items, while the rest are put under category A. “India has sought up to five years’ time to implement the category B provisions. However, we are not seeking any financial assistance for implementing any of the provisions,” she said.

Sitharaman said India would need to amend its customs rules to comply with the TFA. “India will also need to adopt enquiry points, special facilitation measures for perishable goods and a single window system,” she said.

Sitharaman said the TFA includes provisions such as customs cooperation to prevent illegal practices such as under-invoicing, mis-declaration and illicit capital flows, providing an option for the importer to return rejected goods and informing traders when their goods are detained, among others.

Ranja Sengupta, a senior researcher at the Third World Network, said the TFA will lead to import facilitation for developing countries, not export facilitation as developed countries will be able to ship more goods to developing countries as a result of the simplification of customs rules.

“Developing countries will need to make huge investments to make their customs infrastructure better to comply with the TFA. We are bearing this permanent cost just in return for an interim, though indefinite, agreement on public stockholding,” she said.

The TFA was agreed at the Bali ministerial meeting of the WTO in December 2013. Later, the Narendra Modi government refused to ratify the agreement unless its concerns about public stockholding for food security are resolved. The WTO agreed to amend the Bali agreement, providing India an indefinite reprieve on food stockholding.

The TFA will enter into force after two-thirds of the WTO members notify it. India may become the 70th member to notify the agreement.

The centre allocated huge sums of money for the development of ports and announced a single-window clearance mechanism for imports in the 2014 budget to help it meet its commitments under the TFA.

HT Mint, New Delhi, 18th February 2016