US questions India’s concept note on trade facilitation in services pact at WTO

Many countries welcomed India’s concept note pursuing an initiative on a “trade facilitation in services” pact at the World Trade Organization (WTO) on Thursday, but the US raised questions, cautioning about the risks of getting drawn into yet another developed versus developing country confrontation, according to officials familiar with the development.

At a meeting of WTO’s working party on domestic regulation, India introduced its concept note for beginning work on an initiative towards crafting a trade facilitation pact on the lines of the trade facilitation agreement of 2013 for simplifying customs procedures for trade in goods.

India highlighted issues including facilitation of free flow of data across borders, provision of cross-border insurance portability for availing of medical or tourist-related services and streamlining temporary entry formalities like visa processing fees.

China thanked India for proposing the concept paper on trade facilitation in services. A Chinese trade official said its capital is will provide concrete suggestions after the current Chinese holiday.

The European Union trade envoy Ambassador Marc Vanheukelen said India’s proposal on TFS is a strong candidate to be negotiated for WTO’s eleventh ministerial conference in Buenos Aires next year.

Several other Asian as well as African countries suggested India’s proposal can be a good basis for addressing innumerable hurdles in global trade in services.

However, the US said India’s concept paper carries the risk of triggering a developed versus developing country face-off.

The US cautioned that the special and differential flexibilities proposed in India’s paper can only involve longer time periods for implementing the agreement but not result in new concessions for developing countries.

A US services official pointed obliquely that the comparison between the trade facilitation agreement (TFA) which was concluded in December 2013, and the India’s proposal on trade facilitation in services might not hold ground as TFA had commanded consensus for bringing about improvements in three major GATT articles.

The articles include freedom of transit (Article V), fees and formalities connected with importation and exportation (Article VIII), and publication of administration of trade regulations (Article X).

Lastly, the US asked India to clarify whether its proposal will need a new mandate that goes beyond the current mandate of the WTO’s working party on domestic regulation.

In short, the US’s questions amounted to a serious challenge for India to satisfy in the coming months, said a services negotiator who asked not to be quoted. “Will the US subject its non-paper on electronic commerce to the same considerations as espoused on India’s concept note for trade facilitation in services,” the negotiator maintained.

Significantly, the US seemed more favourable to another proposal by Australia, the EU and several other countries for negotiating “administration of measures” such as licensing requirements and procedures, qualification requirements and procedures.