Trade Facilitation Should or Should Not

Recently you might have heard a lot about the WTO Trade facilitation agreement between various WTO members. Finally it seems India has got its legs and is learning to take a stand when all the developed countries are against it.

First of all I should tell you what the issue is. Trade facilitation basically means easing of the custom laws, reducing documentation, and bringing in line of the custom rules, practices and infrastructure to that of the developed countries. This will surely increase the trade in the world economy.

India will also get lots of benefits in long run. Then what is the problem in adopting it.

Well India does not have any problem in adopting the agreement. The only thing that is preventing it is the India’s Food Security Bill.

India under the WTO agreement on Agriculture can provide only 10% subsidy on agriculture to farmers. India at present is well below this limit and hence there was no problem with this till the National Food Security act was not passed. But once the NFSA is fully implemented the food subsidy will go beyond the 10% level. It is the biggest problem which is hampering India to accept an agreement on Trade Facilitation.

India is using this agreement as armour to allow it and other developing countries to give more subsidies. If India signs the agreement then developed countries will have no compelling reason to accept the demands of India. So India retreated from signing the document and under WTO any agreement is applicable only after it is accepted by all the country members.

Though this move will hamper the development and trade of India but then it has to decide between the food security of millions of poor and hungry Indians and better trade practice.