Salvaging the WTO Trade Facilitation Agreement

World Trade OrganizationBy Rob Mulligan

On July 31, India blocked the implementation of the Trade Facilitation Agreement (TFA) approved by all the members of the World Trade Organization (WTO) last December, effectively preventing a deal that would have cut red tape at air- and seaports, created 21 million jobs and added $1 trillion to the global economy over the course of a decade.

USCIB advocated vigorously for the agreement’s adoption and implementation, helping to form a business coalition dedicated to moving the deal forward, and participating in a social media campaign led by the International Chamber of Commerce (ICC) to #savetheTFA.

Despite the global business community’s appeals, India’s action meant that WTO members failed to reach an agreement by the July 31 implementation deadline, sapping confidence in the WTO as a forum for multilateral negotiations and undermining the organization’s credibility as a monitor of international trade policies. Shortly before members missed the deadline, WTO Director General Roberto Azevedo noted “if the system fails to function properly, then the smallest nations will be the biggest losers.”

India actually stood to benefit handsomely from the TFA, with research suggesting that the agreement’s implementation would have added $21 billion to India’s economy by 2020. New Delhi blocked the deal and held it hostage because it sought to renegotiate multilateral rules that would exempt Indian food security subsidies from WTO review. But by delaying the TFA’s implementation, it will now be more difficult to address broader multilateral trade negotiations, including food security subsidies.

All is not lost, however, and it is worth noting that there are options to get countries back to the negotiating table. For example, the Peterson Institute’s Jeffrey F. Schott and Gary Clyde Hufbauer have published an article in which they put forward a number of ideas to salvage the TFA. Schott and Hufbauer are the authors of an earlier study that estimated the payoff from the TFA would amount to $1 trillion to global GDP over time. They argue that if obstructionist countries do not relent, the next best alternative would be a plurilateral TFA, binding only those member countries who sign on to the deal.

There is a window of opportunity to salvage the TFA and the WTO multilateral system when trade ambassadors return to Geneva in September. In the lead-up to these negotiations, USCIB will be reviewing the Peterson study and other analyses, and working with the United States government, ICC and other members of our global network to get the TFA talks back on track as soon as possible. USCIB is also organizing a forum for discussing the TFA and other trade issues at our October 30 conference: Exploring New Approaches to Trade, Investment and Jobs.

Rob Mulligan is senior vice president of policy and government affairs at the United States Council for International Business.

Staff contact: Rob Mulligan

More on USCIB’s Trade and Investment Committee

Staff Contact:   Alice Slayton Clark

Director, Investment, Trade and China
Tel: 202.682.0051

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