WTO meet: India needs to pitch for trade facilitation for export diversification.

The commerce ministry is reportedly seeking inputs from industry as it firms up strategy for the forthcoming ministerial planned by the World Trade Organization (WTO) in Bali, Indonesia. India needs a proactive stance to purposefully advance world trade talks, taking into account the interests of developing economies and the least developed countries (LDCs).

We need to pitch for a multilateral agreement on trade facilitation, as it would bring down the costs of doing business and boost the gains from cross-border trade. While average world tariffs are 5% ad valorem, average trade costs are 10%. And facilitation measures like reduced documentation, time-bound clearances and better infrastructure would all enhance trade, although resource mobilisation to improve the facilities must be taken into account.

One recent study finds that if countries improved trade facilitation only halfway to the region's top performer, it would lead to export gains of $1 trillion annually. In parallel, India needs to step up the call for greater trade access. It is true that the leading trading nations have committed up to 97% duty-free and quota-free (DFGF) access for LDCs. But for many developed economies, the 3% of excluded tariff lines cover over 90% of their imports from LDCs! Hence the vital need for the rich nations to offer 100% DFGF access for LDCs.

And, in this context, simplified rules of origin should be part of the deal. Now the WTO's Doha Development Round, begun back in 2001, remains to be concluded. But a part-deal on trade facilitation and market access seems very much achievable and needs to be wrapped up at Bali. It would result in global trade gains, for decades. India has much to gain from improved trade facilitation around the world, as developed markets languish and India tries to diversify export destinations.

Source : economictimes.indiatimes.com