India formally submitted a concept note on a trade facilitation agreement (TFA) in services with the World Trade Organization (WTO) on Thursday, official sources said, taking the first decisive step towards gathering global consensus on a framework to boost worldwide trade in services.
It has told the WTO that just like the TFA in goods, which is aimed at aimed at relaxing customs rules for smoother trade flow, there is a need for a “counterpart agreement” in services, and that the proposed pact must also ensure special and differential treatment for developing and poor nations.
The concept note said: “The TFS (trade facilitation in services) agreement will address the key issues that are pertinent to facilitating trade in services, such as transparency, streamlining procedures, and eliminating bottlenecks.”
The note pitches for the facilitation of Mode 4 services (movement of natural persons) through the simplification of procedures for temporary entry and stay, and clarity in respect of necessary work permits and visas. The Mode 4 services are crucial to India’s interest, as it has a vast pool of skilled professionals, especially in the IT sector.
The latest move by India is crucial because while over half of WTO’s 162 members have so far endorsed the TFA on goods (it will take effect once two-thirds of WTO members ratify it), the multilateral body doesn’t have a similar mechanism for services trade. India has sought comments from various WTO members on its concept note and it will submit the detailed text with the multi-lateral body later once it’s ready.
The TFA in goods was adopted by the WTO in 2014 to expedite the movement, release and clearance of goods as well as to improve cooperation on customs compliance issues to boost trade. It could cut the cost of trade by an average of 14.5% and the impact could be greater than elimination of all remaining tariffs, according to WTO director general Roberto Azevêdo. While any such estimate of likely benefits of a similar agreement in services is yet to be firmed up, analysts believe the TFS has the potential to give similar dividends, going forward.
India is keen on boosting the services sector, as it accounts for over a half of its GDP. India’s concept note on services puts emphasis on the facilitation of free flow of data across borders for meaningful supply of services; facilitation of delivery of services, including through cross border insurance portability for availing of medical or tourist related services; streamlining temporary entry formalities, including visa processing fees and procedures, for people seeking entry into another country to avail of services (for instance, medical services, education services, tourism, etc).
The note says measures such as single-window clearance for setting up commercial presence need to be in place.
The note also focussed on steps relating to taxation, fees/charges, discriminatory salary requirements, social security contributions in relation to temporary entry, etc in order to ensure that these do not unfairly disadvantage foreign service suppliers.