At Bali, India must go for trade facilitation

At the Bali ministerial of the World Trade Organization that begins tomorrow, it would be in India’s interest to strive for a global deal on trade facilitation. We now have huge stakes in the global trading system, what with trade amounting to over 50% of domestic gross value-added, and we do need to revamp and standardise the multilateral rules to boost gains from trade.

Trade facilitation is about rationalising and simplifying trade interface between trading partners, and broadly encompasses compliance with government rules, including tax payments, financing, insurance, documentation, legal services, transportation, handling, measurement, storage and assorted standards, some of which are thinly disguised.

And modern trade facilitation is essentially about eliminating costly physical operations, with IT-enabled vetting and oversight systems that are non-intrusive, and designed to reduce costly delays. In tandem, there is much scope to reduce cost duplication for trade operators with harmonisation of norms and procedures, including for certification and testing.

Developing nations have been chary of higher standards for trade facilitation, seeing them more as non-tariff barriers. Also, the importance of trade taxes for lower-income economies seem to come in the way of trade facilitation. But trade integration has been more rapid than ever, and there are enormous gains to be reaped by the South from the “hyperglobalisation”.

We need to adopt forward-looking norms, if need be with a transition period for adaptation. High tariff barriers relative to trading partners do divert trade and distort value addition.

Hence the need to be proactive on trade facilitation and prevent the rise of mega-regionalism and faltering support for globalisation in the mature markets.