Q. Consider the following statements:

  1. India has ratified the Trade Facilitation Agreement (TFA) of WTO.
  2. TFA is a part of WTO’s Bali Ministerial Package of 2013.
  3. TFA came into force in January 2016.

Which of the statements given above is/are correct?

  • 1 and 2 only
  • 1 and 3 only
  • 2 and 3 only
  • 1, 2 and 3

Answer: (a) 1 and 2 only

Trade Facilitation Agreement (TFA):
  • The TFA is the WTO’s first multilateral accord that aims to simplify customs regulations for the cross-border movement of goods.
  • It was outcome of WTO’s 9th Bali (Indonesia) ministerial package of 2013 and came into force from February 2017.
  • It aims to create a less discriminatory business environment.
  • Provisions:
    • Lowering import tariffs and agricultural subsidies.
      • It will make it easier for developing countries to trade with the developed world in global markets.
    • Abolish hard import quotas.
      • Developed countries would abolish hard import quotas on agricultural products from the developing world.
      • Instead developed countries would be allowed to charge tariffs on amount of agricultural imports exceeding specific limits.
    • Reduction in red tape at international borders.
      • It aims to reduce red-tapism to facilitate trade by reforming customs bureaucracies and formalities.
    • Preferential Rules of Origin for Least-Developed Countries
      • Simplified rules for identifying origin and qualifying for preferential treatment with importing countries.
  • Implications
    • The deal will ease trade processes, bring down barriers to trade and enhance the capacity of the developing world to better engage with the global trading network.
    • Significantly change the global trade scenario with international customs practices becoming streamlined and easier trade movement
    • Faster clearance procedures
    • Enhanced conditions for freedom of transit for goods
    • Reduced fees and formalities connected with the import and export of goods.
    • TFA is estimated to reduce global trade costs by more than 14% and could boost global growth by half a percentage point per year.
    • Trade facilitation increases trade flows and lowers trade costs, making it critical for development in Asia and the Pacific.
  • Benefits to India:
    • Bring in simplification and enhanced transparency in cross border trade in goods.
    • Boost economic growth by reducing trade costs and integration into the global economy.
    • The increase in global economic activity will add new jobs and lower the cost of doing international trade by 10 to 15 per cent.
    • Likely to reduce the time needed to import and export goods
    • Predicted to increase the number of new products exported by as much as 20 per cent.