ABSTRACT
It was in the light of the fact that, there were much chaos and hindrances faced by traders across the world in the movement of goods due to “red-tapism”, tariff and non-tariff barriers, that the World Trade Organisation (WTO) decided to formulate the Trade Facilitation Agreement (TFA), a more comprehensive regulation that included, with much specificity and clarity, the aspects that had been left out from the TRIPS and the GATT. The paper examines the objectives sought to be achieved by the said agreement, the impact it would have on the developing and least-developed countries, with special reference to the Indian position, giving way to a critical analysis of the pact. The author, does not look into the legal intricacies of the agreement, but rather has restricted her thoughts to the general concerns and issues related to the ratification of the TFA.
INTRODUCTION
Over three- quarters of the WTO member countries are either under-developed or are in the process of development. The World Trade Organisation (WTO), which was established with the aim of creating a level-playing field for these countries and providing an impetus to the achievement of their developmental goals, was perceived to have provided them with a smooth transitional period in terms of development, thereby helping them get accustomed to the unfamiliar. In view of this, the WTO members had also drafted several agreements and brought out measures that acted as a catalyst of trade and furthered the development of these countries. Developing countries were provided with certain special provisions under the covered agreements, along with an option of technical assistanceBut despite all these pro-development changes advocated by WTO, several under-developed and developing countries have remained side-lined. Hence, the Trade Facilitation Agreement was implemented in December 2017, which sought to pave the way for accelerated development and growth across the globe.
It is to be noted that the agreement was signed by its member countries in December 2013and has made its advent into the international economic scenario at a time when the volume of Indian manufactured products was stooping low due to their inability to survive the competition in the global markets.
This paper seeks to critically analyse the level of efficacy displayed by the agreement in the development developing countries that have ratified it, with special emphasis on the Indian context.
CONCERNS OF DEVELOPING COUNTRIES
The Trade facilitation agreement (TFA) aims to expedite inter-country trade, by reducing or extinguishing the trade and custom barriers which hinder the smooth flow of goods, which is very much in line with WTO’s trade liberalisation goals. According to the WTO, trade facilitation is defined as “the simplification and harmonisation of international trade procedures”,[1] with trade procedures being the “activities, practices and formalities involved in collecting, presenting, communicating and processing data required for the movement of goods in international trade”.[2] This definition relates to a wide range of activities such as import and export procedures (such as customs or licensing procedures), transport formalities, and payments, insurance, and other financial requirements that are quite cumbersome and place an enormous burden on traders.[3] The Trade Facilitation Agreement seeks to fulfill three major objectives, namely, (i) faster and efficient customs procedures, (ii) paperless trade, and (iii) technical assistance and capacity building, and a common standard of trade at the global level.[4]
However, there is a great deal of incongruence between the expected result and the reality. While the key focus of the organisation and that of the agreement is the upliftment of the developing and least-developed countries, the practicality of its application to attain the objective is gravely questionable. This is primarily because most developing countries have incorporated trade facilitation provisions in their economic policies in a manner that would further the country’s own best interests. Some of these countries are even part of other free trade enabling initiatives such as the Regional Comprehensive Economic Partnership (RCEP). However there are grave apprehensions as to whether there should be a binding trade facilitation agreement at the international level which follows a pattern that disregards the individual requirements of the developing countries. Further, the governments of the developing member countries seem quite reluctant to invest their scarce resources to further trade facilitation that would in turn result in development, as opposed to directly investing in developmental projects. Furthermore, the costs that would be incurred by majority of these countries to implement the pattern advocated through the TFA, would be significantly greater than the benefits accrued out of it.
Thus, multilateral agreements of the said kind have been vehemently opposed by major developing countries such as India, Malaysia, Egypt, Pakistan and other member countries who are on a similar footing.[5]The manner of assistance that has been promised by the organisation which would serve as a fillip to the easing of customs shackles, would take a considerable time to reach all the countries in need of it, and in all probability would extend much beyond from the date of enforcement of the agreement.
Hence, a thorough examination of the above-mentioned scenario reveals that the overall losses that developing countries would suffer by diverting their resources to adopt the trade facilitation pact, significantly outweigh the benefits sought to be derived out of it.
Endnotes:
[1]Miranti Riyana and Hew Denis, ‘APEC in the 21st Century’ (2004 ) 32
[2] WTO website and UNCTAD, E- Commerce and Development Report (2001) pg180
[3]Nitya Nanda, ‘WTO and Trade Facilitation’ [2003] EPW 2622, 2625
[4]Prabhir De, ‘WTO Trade Facilitation Agreement – Issues and Concerns’ [2014] EPW 15, 18
[5] Ibid
Part II of this article is available here.
This post has been authored by Sreelakshmi S, a fourth year student of The National University of Advanced Legal Studies (NUALS), Kochi.
Comments