Union Cabinet Approves Trade Facilitation Agreement

• The Union Cabinet has approved a proposal to notify the Trade Facilitation Agreement (TFA) of the World Trade Organization (WTO).
• To implement the agreement, two-thirds of the total members, or 107 countries, have to approve it. India was the 71st country to give nod to the agreement.
• India agreed to sign this agreement only on the condition that there should be “Peace Clause” in WTO that allow India to provide subsidies, which are now prohibited under WTO rules, until a permanent solution to this issue is agreed upon by all member countries. The “Peace Clause” also, therefore, grants India an indefinite immunity from all future disputes even if India exceeds the 10 per cent prescribed limit for granting farm subsidies to its poor and marginal farmers.

National Committee on Trade Facilitation
The Union Cabinet also has decided to constitute National Committee on Trade Facilitation (NCTF) to facilitate both domestic coordination and implementation of the provisions of the Agreement. NCTF will be set up under the Joint Chair of Secretary under the aegis of Union Ministry of Commerce and Industry’s Department of Revenue and Secretary, Department of Commerce.
About Trade Facilitation Agreement (TFA)

• The Trade Facilitation Agreement agreed by members at the Ninth Ministerial Conference in Bali.
• The agreement contains provisions for faster and more efficient customs procedures through effective cooperation between customs and other appropriate authorities on trade facilitation and customs compliance issues.
• It also contains provisions for technical assistance and capacity building in this area.
• 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

Analysis:

• TFA has provisions that India had suggested. These include customs cooperation to tackle money laundering, return of rejected goods, and informing traders when their goods are detained.
• Trade facilitation agreement (TFA) contains provisions for expediting 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.
• Trade experts have said that ratifying the agreement so early could lead to India losing a bargaining chip to secure its interests. That includes finding a permanent solution to the issue of public stockholding for food security purposes and a mechanism to safeguard poor farmers from sudden import surge of farm products.
   

By: Vishal