WTO pact will spur global growth

The endorsement of the global agreement on trade facilitation by the general council of the World Trade Organisation (WTO) is a major step forward for the world trade body. It was after long and frustrating negotiations spread over many years and recurrent deadlocks that member countries had arrived at a basic agreement on trade facilitation.

While all obstacles seemed to have been removed at the WTO’s Bali ministerial meet, India’s stance linking its signing of the agreement to the food stockpiling issue again stalled it. This has also been resolved now with an agreement between the US and India and the WTO endorsing it.

The very relevance of the WTO would have been questioned and the Doha round of trade talks might have suffered a fatal blow if the trade facilitation agreement (TFA) was lost. It is the first major achievement of the Doha round and with the general council adopting the necessary protocol, the agreement is a reality now.

All countries will benefit from the agreement which will ease the movement of goods across borders by laying down uniform and compatible customs procedures, removing obstacles which have hampered speedy trade and reducing transaction costs.

It is estimated that it can give a $1 trillion boost to world trade and create millions of more jobs. Trade is a major catalyst for growth in a world where economies are getting more and more integrated. The agreement underlines the need for a truly multilateral trade regime with the same rules for all countries.

The failure of the WTO to produce such a system had led many countries to develop trade blocs specifically designed for their needs. This works to the disadvantage of countries which are not members of the blocs, like India. There are greater challenges facing the Doha round which involve more difficult trade issues and require compromises on the part of developed countries.

India stands to gain much from the agreement as trade is an important part of its development strategy. But it has to improve its physical infrastructure for trade, like ports and road and rail links, and bring its customs rules in line with the prescribed procedures to take full advantage of it. It must also ensure that the assurances given to it over the food procurement programme and domestic agricultural subsidies are honoured. WTO rules may need to be changed for this, though the peace clause now has permanent validity. It also gives India the time to reform its domestic policies.