Prabhu to push India's proposal on services pact at WTO meet in Morocco

Here is why nations are converging in Morocco for the 2-day meet and what this means for trade

Commerce and Industry Ministry Suresh Prabhu is expected to pitch India's proposal on a trade facilitation agreement (TFA) on services hard at the World Trade Organization (WTO) mini-ministerial meet, which began in Morocco on Monday. 

WTO has broken conventional practices to call this 2 -day mini-ministerial meet for hammering out the exact agenda for the subsequent biennial summit in December, a senior commerce and industry ministry official said. 

This will be Prabhu's first brush with the WTO system and the 35 trade ministers from key economies, after taking charge as Commerce Minister last month.

Why nations are meeting in Morocco

The WTO's biennial ministerial conference - to be held in December- is the biggest multilateral consultation among nations regarding global trade and investment norms. To be held in Buenos Aires, Argentina this time, it will set the discussion and norms for sectoral issues, at least for the next 2 years. 

However, negotiations have heated up over the agenda of discussion to be taken up in December with various proposals by groups of nations at loggerheads with each other. Since the agenda has to be adopted unanimously, nations are meeting in Morocco for a reconciliation.

Richer nations led by the United States and the European Union have supported the introduction of a proposed set of global rules for e-commerce. WTO procedures mandate that any new resolution garner the unanimous support of member-countries before being adopted. Even so, some nations including Australia, Switzerland and Norway have made fresh arguments on its behalf.

On the other hand, another group of nations, led by China is also pushing for a similar trade facilitation agreement (TFA) on investment. The government feels allowing such a discussion at WTO would be akin to handing over policy space to decide on things such as the foreign direct investment norms and arbitration clauses.

What is the TFA in services

Based on the similar TFA on merchandise goods that became functional in February, earlier this year, India's proposal focuses on expediting the global trade in services, by allowing for easier movement of skilled workers between countries, among others.

In July, India had revised its proposal on TFA in services at the WTO and told other nations that the proposed agreement will only apply to the existing commitments scheduled under the General Agreement on Trade in Services.

While India seeks to leverage its huge capabilities in educated professionals, developed countries are cautious, experts said. Also, 23 WTO members including the EU are also negotiating a separate Trade in Services Agreement.

Other demands from India and legacy issues

India is also expected to stick to its stand that the development-based issues of the Doha Development Agenda (DDA) need to be uniformly reaffirmed, the senior official mentioned above, added.

This had not occurred at the last ministerial conference held in Nairobi in 2015. And, the contentious issues of public stockholding of food for food security purposes and a special safeguard mechanism in agriculture have also not seen much progress.

Following India's agreement with the US on the issue in 2013, the Bali Ministerial Conference came up with the "peace clause" that permitted uninterrupted implementation of India's food security programme till a permanent solution was found. This allows India to procure and stock foodgrain for distribution to the poor without being penalised by WTO members even if it breaches the 10 per cent subsidy cap prescribed by the multilateral trade body.

For a permanent solution, India has proposed either amending the formula to calculate the food subsidy cap of 10 per cent, which is based on the reference price of 1986-88 or allowing such schemes outside the purview of subsidy caps. On the other hand, the Special Safeguards Mechanism, a long-standing demand of developing nations, allows countries to temporarily raise tariffs to deal with surging imports and subsequent price falls.

However, the DDA, adopted in 2001 at the fourth ministerial conference, has not seen much progress in the past 16 years.