BackIndia’s port push in line with WTO trade pact
Single-window clearance, funds for development of ports will help meet obligations even as India threatens to block trade facilitation agreement
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New Delhi: At a time when India has threatened to block the trade facilitation agreement (TFA) that was reached at the World Trade Organization’s Bali meeting in December, the government has allocated huge sums of money for development of ports and has announced a single-window clearance mechanism for imports in the budget that will help it meet its commitments under the accord.
India has taken a tough stand on the TFA with its permanent representative at the WTO, informing the multilateral trade body that it will not be possible for India to ratify the agreement, as it feels the talks on finding a permanent solution on the issue of food security and public stockholding are not progressing as expected. India will finalize its stand on TFA at a cabinet meeting on Wednesday, one day before the general council of the WTO takes up the agreement aimed at streamlining cross-border trade.
In his budget speech on 10 July, finance minister Arun Jaitley said 16 new port projects are proposed to be awarded this year with a focus on port connectivity. “ ₹ 11,635 crore will be allocated for the development of outer harbour project in Tuticorin for phase I." Jaitley said.
The finance minister also proposed to implement an “Indian Customs Single Window Project" to facilitate trade. “Under this, importers and exporters would lodge their clearance documents at a single point only. Required permissions, if any, from other regulatory agencies would be obtained online without the trader having to approach these agencies. This would reduce interface with governmental agencies, dwell time and the cost of doing business," he added.
To be sure, development of new ports and single-window clearances are also necessary to improve India’s creaking infrastructure and will help the nation improve its ranking in the World Bank’s “ease of doing business" survey.
The TFA requires developing countries to build infrastructure capacity for faster clearance of cross-border shipments without hassles. India has also taken binding commitment for expedited shipment for air cargo companies under the agreement.
While developed countries have committed to provide technical and financial assistance to least-developed countries to build the infrastructure, India is unlikely to seek any such help.
In trade facilitation, commitments for developing and least-developed countries fall under three categories. Category A includes provisions that will be implemented immediately upon the agreement’s entry into force; category B includes commitments that will require a transition period; and category C involves those commitments that will require both a transition period and technical assistance.
India was supposed to notify a timeline to implement its commitments under the TFA by 31 July and will have to make legal amendments at two or three places to implement the Bali ministerial agreement.
Indian commerce ministry officials say India would put most of its commitments under category B, which will provide it a transition period to implement.
The Economic Survey released on 9 July said India’s persistent efforts, along with those of other like-minded countries, eventually resulted in either elimination of unwarranted parts of the negotiating text or suitable modifications therein to resolve implementation difficulties. “India has initiated inter-ministerial consultations for drafting India’s notifications on category of commitments required under the agreement," it added.
A trade policy analyst who spoke under condition of anonymity said India as such does not have any major problem with the TFA, which is why it is trying domestically to be compliant with it. “However, at the WTO platform, we are opposing it as a strategy because we know once we sign off the TFA, there will be no leverage left to push for a permanent solution on food security and public stockholding," she added.
Commenting on the ongoing discussions on TFA, Sidharth Birla, president of lobby group Federation of Indian Chambers of Commerce and Industry, said in a statement that this agreement will lead to significant reduction in transaction cost involved in trading across borders. “This is good for both trade and enterprise in India and we expect the government to take a considered view on signing of this agreement. The benefits that would accrue to Indian industry in the long term following this agreement would be sizable and would help improve competitiveness of our exports," he added.
Devinder Sharma, a food and trade policy analyst, said a trade facilitation agreement will not help India’s cause unless the non-trade barriers faced by India in developed countries are removed. “At a time when developed countries are closing their borders for free movement of skilled manpower from developing countries, we are opening our borders for free movement of their goods," he added.
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