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At WTO, India proposes ways to cut transaction costs

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At WTO, India proposes ways to cut transaction costs

At WTO, India proposes ways to cut transaction costs
Photo credit: AFP

The proposed Trade Facilitation in Services Agreement will address key issues such as transparency, streamlining procedures for facilitating trade in global services, India says

India has floated a concept paper at the World Trade Organization on how to reduce transaction costs that impose regulatory and administrative burden on global trade in services, on the lines of what was concluded in the so-called Trade Facilitation Agreement (TFA) of 2014 for trade in goods.

“Like the TFA, there is a need for a counterpart agreement in services, an agreement on Trade Facilitation in Services (“TFS Agreement”), which can result in reduction of transaction costs associated with unnecessary regulatory and administrative burden on trade in services,” India argued in the paper submitted to the WTO’s Working Party on Domestic Regulation on 23 September.

The proposed “TFS Agreement”, according to India, will address key issues such as transparency, streamlining procedures, and eliminating bottlenecks, for facilitating trade in services.

Given the burgeoning trade in services in which India hopes to gain market access in major industrialized countries that impose a range of domestic regulatory barriers, New Delhi wants WTO members to address several “cross-cutting issues relevant for all modes of supply of services”. Issues include publication and availability of information, including automation and international electronic exchange of trade data, transparency in application of all measures of general application affecting trade in services, ensuring administration of measures affecting trade in services in a “reasonable, objective and impartial manner”, “cooperation among relevant authorities, opportunities to comment before entry into force of measures affecting trade in service, procedures and timelines for consideration of applications from service suppliers, disciplines on taxes, fees, charges and other levies, and institutional arrangements.

India’s concept note also covers specific issues in four modes of supply of services of the WTO’s General Agreement on Trade in Services (GATS). In Mode 1 of GATS, which deals with cross border services, India wants “facilitation of free flow of data across borders for ensuring meaningful supply of Mode 1 services.”

As regards Mode 2 of GATS, India wants facilitation of services that would enable “cross-border insurance portability for availing medical or tourist related services in a foreign country” and streamlining “temporary entry formalities” like visa processing fees and “procedures and timelines for consumers seeking entry into another country to avail of medical services, educational services, and tourism”.

In Mode 3 of GATS, which involves setting up of commercial establishment in a foreign country, India has underscored the need “single window clearance” for setting up ventures/shop, and disciplines to ensure that foreign services supplies are not unfairly treated through exorbitant charges.

For the movement of short-term services providers under GATS Mode 4, which is India’s core area of interest in global trade in services, India wants “simplification of procedures for temporary entry and stay, and clarity in respect of work permits and visas” and “disciplines on measures relating to taxation, fees/charges, discriminatory salary requirements, social security contributions in relation to temporary entry.”

At present, India is involved in a major trade dispute with the United States at the WTO on Washington’s alleged barriers on Indian software companies. India had charged Washington for imposing burdensome measures and financial fees on Indian software companies running into billions of dollars. New Delhi raised two sets of issues concerning US’s measures relating to fees for L-1 and H-1B visas and measures relating to Numerical Committment for H-1B visas. A preliminary ruling on India’s dispute is expected to be issued in the coming months.

India’s concept note on TFS would face fierce opposition from one major industrialized country, the US, which had consistently opposed attempts to remove domestic regulation barriers in Mode 4 on grounds that they would impinge on immigration and other domestic issues, according to analysts familiar with the negotiations on domestic regulation.

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