WTO adopted Trade Facilitation Agreement

Nov 29, 2014 15:13 IST

World Trade Organisation on 27 November 2014 adopted the Trade Facilitation Agreement (TFA). The agreement was approved during the General Council meeting of 160-member WTO in Geneva, Switzerland.

The TFA will enter into force once two-thirds of members have completed their domestic ratification process.

With this TFA Facility announced by WTO in July 2014 also become operational. The TFA Facility will assist developing and least-developed countries in implementing the WTO’s Trade Facilitation Agreement.

Besides, the members also adopted decisions related to public stockholding for food security purposes and the post-Bali work.

Under the public stockholding for food security purposes it was agreed that peace clause agreed at Bali Ministerial Conference in 2013 will remain in force even after December 2017 until a permanent solution is find. It was also agreed to set the target to conclude the negotiation on public stockholding by December 2015.

On Trade Facilitation Agreement (TFA)

The negotiation on Trade Facilitation Agreement was concluded during the Bali Summit of WTO in 2013. The TFA contains provisions for expediting the movement, release and clearance of goods, including goods in transit. It also sets out measures for effective cooperation between customs and other appropriate authorities on trade facilitation and customs compliance issues.

The Trade Facilitation Agreement has three sections:

Section I: It contains provisions for expediting the movement, release and clearance of goods, including goods in transit. It also sets out provisions for customs cooperation.

Section II: It contains special and differential treatment (SDT) provisions that allow developing and least-developed countries (LDCs) to determine when they will implement individual provisions of the Agreement.

To benefit from SDT, a member must categorize each provision of the Agreement and notify other WTO members of these categorizations in accordance with specific timelines outlined in the Agreement.
• Category A: provisions that the member will implement by the time the Agreement enters into force (or in the case of a least-developed country member within one year after entry into force)  
• Category B: provisions that the member will implement after a transitional period following the entry into force of the Agreement
• Category C: provisions that the member will implement on a date after a transitional period following the entry into force of the Agreement and requiring the acquisition of assistance and support for capacity building.

Section II: It contains provisions that establish a permanent committee on trade facilitation at the WTO, require members to have a national committee to facilitate domestic coordination and implementation of the provisions of the Agreement. It also sets out a few final provisions.

On Public Stockholding

The members agreed towards finding a permanent solution and set a target date to conclude the negotiations by December 2015.

At the 2013 Bali Ministerial Conference, the members had agreed on an interim solution or what is called peace clause. The clause provided for finding a permanent solution by 2017 until then interim solution would remain in force.

It was agreed as members from developing countries were for shielding public stockholding programmes for food security so that they would not be challenged legally even if a country’s agreed limits for trade-distorting domestic support were breached.

However, it provided that Governments seeking the shelter of the peace clause have to avoid distorting trade (i.e., affecting prices and volumes on world markets) or impacting other countries’ food security, and to provide information to show they are meeting those conditions.

But by the end of July 2014, members were deadlocked again over what after 2017. That is if a member country say India breaches the food subsidy cap agreed under the Agreement on Agriculture will be challenged legally.

Comment

By agreeing to these three decisions WTO is back on track. In other words all the Bali decisions: trade facilitation, public stockholding, the LDC issues, the decisions on agriculture, development, and all of the other elements, can now be negotiated and dealt once again.

The agreement is expected to push up global trade by around 1 trillion US dollars and create tens of millions of new job opportunities including in India.

The agreement on TFA and food security is an achievement for India which wanted the peace clause to continue until a permanent solution on food security programmes is found.
The move is crucial for India to meet over 1 lakh crore rupees a year food security programme, which needs 62 million tonnes of foodgrain in a year.

This will enable India to continue procurement and stocking of foodgrain for distribution to poor under its food security programme without attracting any kind of action from WTO members.

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