Govt mulls ratifying WTO trade facilitation agreement
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ISLAMABAD: Pakistan considers ratifying WTO’s Trade Facilitation Agreement (TFA) which contains provisions for expediting the movement, release and clearance of goods, including goods in transit.
After ratification, Pakistan will become the 13th World Trade Organisation member — first from South Asia — to accede to the treaty.
In December 2013, WTO’s 161 members concluded negotiations on the TFA at the Bali Ministerial Conference, as part of a wider “Bali Package”. The agreement will enter into force once accepted by two-thirds, or 108, members of the WTO.
The new TFA will also set out measures for effective cooperation between customs and other appropriate authorities on trade facilitation and customs compliance issues.
The WTO members that ratified the agreement include Niger, Nicaragua, Trinidad and Tobago, the Republic of Korea, Hong Kong China, Singapore, the United States, Mauritius, Malaysia, Japan, Australia and Botswana.
An official source told Dawn that the Ministry of Commerce has evolved a draft summary for sending to the cabinet for approval. “We want to get it approved as early as possible,” the official said, adding that it will help in promoting transit trade in the region.
Pakistan has recently ratified an international convention on movement of transit goods (TIR Carnet) to facilitate transit trade with Central Asian states, Iran and Turkey. The commerce ministry has, however, clarified that there are clauses which gives Islamabad a lever whether to allow Indian transit goods via Pakistan or not.
But the official did not elaborate whether the same provision are there in the text of the new TFA agreement. Afghanistan and India have constantly pushing Pakistan for allowing Indian goods for transit to Kabul and beyond.
The Geneva-based WTO has intensified efforts to advance the ratification process with a view to achieving the required approval from two-thirds of the WTO members by the Nairobi Ministerial conference scheduled in December 2015.
According to the official, the WTO director general has also sent a letter to Pakistan in July 2015 for early ratification of the treaty.
The draft summary of the commerce ministry says the TFA is primarily focused on addressing inefficiencies of international trade procedures and making them transparent with a view to reducing trade costs.
Provisions of the TFA are about reforming the bureaucratic processes and procedures, particularly of Customs, coupled with institutional reforms of the public sector dealing with trade, it says.
The TFA will boost global trade by reducing the processing time and costs involved while carrying out cross-border trade transactions, thereby unleashing growth potential, alleviating poverty, and raising living standards.
The Organisation for Economic Cooperation and Development (OECD) estimates that full implementation of the TFA would reduce the cost of trading by up to 14pc of total costs for low-income countries, 15.1pc for lower- to middle-income countries and 12.9pc for upper middle-income countries. Pakistan falls in the category of lower- to middle-income countries.
The TFA is a unique agreement as it provides WTO members flexibility to categorise its provisions into three categories for implementation: A) implementation upon entry into force; B) deferred implementation; and C) linking implementation with implementation capacity and provision of technical assistance by donors.
Pakistan has already notified its category-A commitments to the WTO, while work on finalising its category-B and C commitments is under way in consultation with all the stakeholders. WTO members can seek development assistance from donors and development partners for acquiring the capacity to implement provisions placed in the category C.
According to the summary, the ratification of the TFA is necessary for its entry into force, which would not affect the timing and manner of implementation of the agreement.
Pakistan, like all other developing and least developed countries, would implement provisions of the TFA as per its sovereign decision in accordance with the categorisation notified to the WTO. However, ratification at an early date would send positive signals to foreign investors and place Pakistan ahead of other WTO members for seeking development assistance from donors.
Published in Dawn, August 30th, 2015
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