India will soon submit a formal proposal before the World Trade Organisation (WTO) on a Trade Facilitation Agreement (TFA) in services.

The objective of the proposed TFA in Services is to ease the flow of global services trade, including temporary movement of software, accounting, medical and consulting professionals as well as similar skilled workers.

Commerce Minister Nirmala Sitharaman had shared the idea of a global services trade facilitation pact with WTO Director General Roberto Azevedo and trade ministers from 25 other WTO member countries, at a meeting held on the sidelines of the recently-concluded Organisation for Economic Co-operation and Development (OECD) ministerial council meeting in Paris.

Big breakthrough

“The WTO DG and most of the trade ministers welcomed the idea. The DG wanted India to formally submit a proposal. This is big breakthrough as the idea has now been accepted at the multilateral level. We will submit our proposal at the earliest,” Ms. Sitharaman told reporters.

“Once we have a TFA in services at the WTO-level, it will even pave the way for better negotiations on services at the bilateral and regional Free Trade Agreement negotiations,” she said. In the formal proposal, India is likely to push for a clear distinction between temporary movement of professionals and (permanent) migration.

This is important because India is strong in terms of skilled white-collared workers and professionals from streams like IT, medical and para-medical services, and architecture.Therefore, their easier movement to other countries for short-term projects has been high on its agenda.

A global pact on services trade facilitation will also help in providing greater clarity in case of disputes arising out of visa-related restrictions, the Minister said.

Visa fees

India and the US are currently engaged in a dispute at the WTO level after Washington increased visa fees for H-1B and L-1 categories which are extensively used by Indian IT companies. “We want services to be recognised at the WTO level as a tradeable item, and hence there should be a framework that will give clarity on definitions and how services disputes can be addressed,” Ms. Sitharaman said.

Meanwhile, countries including China are pushing for a ‘TFA in Investment’ at the WTO level, but that proposal has not received much support, sources said, adding that several developed countries also wanted discussions at the WTO level on e-commerce and global value chains.

India and several other countries have already ratified a ‘TFA in Goods’ for easier movement (including release and clearance) of goods across borders.