India to raise services pact issue with US

Commerce minister Nirmala Sitharaman is expected to raise the matter with her counterpart, US trade representative Michael Froman, at Trade Policy Forum meeting


File photo of commerce minister Nirmala Sitharaman. Photo: Pradeep Gaur/Mint
File photo of commerce minister Nirmala Sitharaman. Photo: Pradeep Gaur/Mint

New Delhi: India will seek US cooperation for its proposal at the World Trade Organization (WTO) for an agreement on trade facilitation in services, aiming to reduce bottlenecks faced by services suppliers.

Commerce minister Nirmala Sitharaman is expected to raise the matter with her counterpart, US trade representative Michael Froman, during the two-day Trade Policy Forum meeting that begins in Delhi on Wednesday.

“We will raise the matter under the discussion on trade in services. We are willing to work with the US on the proposal,” a commerce ministry official said, speaking on condition of anonymity.

The matter is significant as the US had raised several objections to the India’s concept note presented at the WTO on 6 October. The US said the concept note carried the risk of triggering a developed versus developing country face-off. It cautioned that the special and differential flexibilities proposed in India’s paper can involve longer time periods for implementing the agreement but not result in new concessions for developing countries.

India’s proposal includes reducing high fees, opaque and cumbersome procedures and complex requirements for licensing and movement of persons. It builds upon the Trade Facilitation Agreement (TFA) in goods, signed at the Bali ministerial meeting of WTO members in December 2013, aimed at streamlining customs procedures to cut the time and costs in moving goods across borders. “Many members expressed interest in the proposal and invited India to provide more details,” a WTO statement said.

The proposed agreement sets provisions on all four modes of services supply. For services supplied through “mode 3” (a foreign firm setting up subsidiaries or branches to provide services in another country), it suggests streamlining the setting up of businesses through a “single window”.

For the cross-border movement of services suppliers (known as “mode 4”), it suggests simplifying work permit and visa procedures and ensuring that measures relating to taxation, fees and social security contributions do not unfairly disadvantage foreign service suppliers.

Other suggestions include enhancing cooperation among authorities, facilitating cross-border data flow and allowing WTO members to comment on measures before they come into force. The proposal also foresees special and differential treatment for developing countries.

“While several members said their capitals are still reviewing the proposal, they questioned India on the implications on members’ domestic regulations, and the expected benefits for developing and developed members,” according to a WTO statement.

“Some members said that the proposal touched upon sensitive issues, such as public education and health services,” according to the statement.

Under the India-US Trade Policy Forum, technical level discussions were held on Tuesday on issues concerning agriculture, services and goods, intellectual property rights (IPR) and manufacturing. These will be followed by discussions between India’s commerce secretary and the deputy US trade representative on Wednesday.

A ministerial-level meeting is scheduled for Thursday where Froman will lead the US and Sitharaman the India side.

“Both the sides would be reviewing the progress achieved on the issues agreed upon in work plans for 2016, under all the four work streams and would be working out the way forward for 2017,” a commerce ministry statement said.

India and the US have lodged several trade disputes against each other, at the WTO, giving the impression that both sides are engaged in a trade war. However, despite growing differences over trade matters, bilateral trade grew 4.9% in 2015-16, with India enjoying a $20.6 billion trade surplus.

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