India agrees to support implementation of WTO Trade Facilitation Agreement

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Ms. Nirmala Sitharaman, Minister of State for Commerce & Industry (Independent Charge), announcing the breakthrough in WTO TFA talks in New Delhi on November 13, 2014 (Pic. source - Ministry of Commerce)

  After months of resistance, India has agreed to support the implementation of the World Trade Organisation’s Trade Facilitation Agreement (TFA). The TFA is considered the biggest breakthrough since the formation of the WTO and a major reform in multilateral trade. The TFA aims to reduce trade barriers, simplify trade procedures and reduce trade costs significantly. According to WTO estimates, the TFA has the potential to add over $1 trillion to the global economy. In the Bali conference last year, WTO members had agreed to adopt the TFA by July 31, 2014. WTO members had allowed India a peace clause which protected its food security programmes until a permanent solution that was supposed to be found by 2017. However, the new government in India raised concerns over the deadline and sought clarifications on public stockholding limits. Nirmala Sitharaman, Minister of State for Commerce & Industry (Independent Charge), India, said, “We supported the Bali Package but when subsequent developments belied that hope, India had no option but to seek a course correction. India, therefore, took the stand that till there was an assurance of our concerns being addressed, it would be difficult to join the consensus on the Protocol of Amendment for the Trade Facilitation Agreement.” This led to an impasse at the WTO with other countries threatening to isolate India on other issues including the food security concerns. However, the matter was resolved today following discussions between India and USA which included talks between India’s Prime Minister Narendra Modi and USA’s Barack Obama during Modi’s visit to USA in September 2014. Michael Froman, United States Trade Representative (USTR) said today, “In recent days, officials of both governments worked intensively and reached an agreement that should give new momentum to multilateral efforts at the WTO.  In doing so, the United States and India reaffirm their joint commitment to the success and credibility of the WTO." The agreement has two key points: implementation of the TFA without any conditions; and continuation of the peace clause on food security programmes until a permanent solution is found (and not 2017). USA has also announced that intensified negotiations will take place to arrive at such a permanent solution. This is what India had asked for and the Indian government has expressed satisfaction at the talks. The Ministry of Commerce said, “We are extremely happy that India and the US have successfully resolved their differences relating to the issue of public stockholding for food security purposes in the WTO in a manner that addresses our concerns.” Nirmala Sitharaman also reiterated that India was not alone in blocking the TFA. She said, “Many countries saw merit in what we were asking for. India was not alone or isolated. Others were simply not speaking up.” The agreement between India and USA will be considered by the full WTO membership soon. Roberto Azevêdo, Director-General, WTO, has said, "This breakthrough represents a significant step in efforts to get the Bali package and the multilateral trading system back on track.  It will now be important to consult with all WTO members so that we can collectively resolve the current impasse as quickly as possible."  

This article was published on November 13, 2014.