INDIA TO GAIN FROM LIBERALISATION OF SERVICES IN WTO NEGOTIATIONS
Date : 29 Oct 2004
Location : New Delhi
India and other developing countries will gain significantly from liberalisation of world trade in services in the negotiations in the World Trade Organisation (WTO). India has offensive interests in liberalisation of services as it has some comparative advantages which are not shared by other countries in the services sector. Export of services from India is growing 2.2 times faster than other export sectors. However, domestic reform priorities must inform liberalising commitments and these would constitute the defensive negotiating interests of India. These are among the major recommendations of the Consultation on the WTO July 2004 Framework: The Way Forward which was organised by the United Nations Conference on Trade and Development (UNCTAD) and was inaugurated by Shri Kamal Nath, Minister of Commerce & Industry, who had stated that this was first Consultation after the Framework was launched and he was happy to be kicking off the debate on the subject in the country. The recommendations were released by Ms. Lakshmi Puri, Director, Division of International Trade in Goods, Services and Commodities, UNCTAD/Geneva at a news conference here last evening. Shri Kamal Nath in his address had underlined the need for genuine agricultural reforms on the part of the developed countries and had also hoped for genuine liberalisation of the services sector and for a development-friendly non-agricultural market access (NAMA) Framework.
On NAMA, Ms. Puri said that the Consultation had noted that tariff peaks and tariff escalations in major markets for India had hindered its exports and therefore, these would have to be addressed. Further, adjustment cost to the industry following elimination of tariffs under NAMA could be significantly higher for certain products, in particular for small and medium enterprises (SMEs). Hence, flexibilities would be needed to address adjustment costs which would vary from sector to sector.
On agriculture, discussions emphasised the need to identify the "watch points", or concerns, of developing countries with respect to the upcoming negotiations on the modalities for agricultural liberalisation. In terms of offensive interests, it was necessary to clear up the backlog of liberalisation on the part of developed countries. On the defensive side, it was for developing country governments to maintain sufficient policy space in selecting measures to meet their long-term development goals.
In the agricultural market access, the concern of developing countries was the selection of tariff cut formula, which would achieve elimination of tariff peaks and tariff escalation in developed countries. The current ambiguity in the July Framework as regards tariff capping, and the introduction of sensitive products, suggested that developed countries would be trying hard to maintain high tariff barriers on their "sensitive" products, which coincided with range of products that exhibited tariff peaks. In order to restrain this flexibility, developing countries could request an exclusion of products of export interest to them from sensitive products of developed countries. There is a potential difficulty in selecting tariff bands, under a single approach with tiered formula, given the disparities in tariff structure (e.g. the distribution of bound tariff rates) among developing countries, the report says.
There was also a need to account for implications for export due to concessions in imports, and a need to look into the costs of securing market protection. Too much protection for developing countries could go against India’s export interests in the area of South-South trade. Less than 40% of India’s exports were destined to OECD countries, and most of post-UR competition for India was in developing country markets. Further, the report notes that what hinders India’s exports to OECD countries are sanitary and phytosanitary (SPS) measures and technical barriers to trade (TBT), which needs to be seriously addressed.
On Trade Facilitation, better management of trade and an enabling environment is required for promoting trade. However, some felt that this was an issue which could be implemented provided necessary technical assistance and capacity building is provided. Harmonisation of procedures should be sought through cooperation with agencies such as WCO (World Customs Organisation). There is a need to ensure certainty, uniformity and transparency in trade facilitation, the report adds.