Sound Indian Move on Services Trade
India has to do its bit for multilateralism
In the background of the World Trade Organization’s Trade Facilitation Agreement for cross-border commerce in goods coming into force on February 22, India has done well to press ahead with its proposal for a similar agreement for services. It is welcome from two perspectives. One is rejuvenating a listless multilateral process of reaching agreement on trade, which had been squeezed, on the one side, by shortsighted refusal on the part of member countries, including India, to reach agreement even on subjects on which differences between parties are minor, and, on the other, by a shift in preference to regional trade agreements. Now that protectionist tendencies are raising their head in several advanced countries, including in the US, it makes eminent sense to reinforce the multilateral trade forum, the WTO.
The other perspective from which India’s present initiative is welcome is that services, trade in which has been growing faster than trade in goods, permit India to make common cause with industrial countries, which dominate the trade. India’s rank in trade in services is several notches higher than its rank in trade in goods. Information technology-related professional services occupy the spotlight, thanks to the proposed tightening of H-1B visas in the US. But India is unable to tap in full the potential for, say, medical tourism because insurance in the home country of the tourist is not readily portable across borders and hospitals in India do not get accredited for treatment. In the jargon, H-1B visas relate to Mode 4 delivery of services, in which people cross borders to that end. Medical tourism is Mode 2 trade in services, in which the service buyer travels to the exporting country. Issues in all four modes have to be tackled. The growing trade in audio-visual content offers common cause for Hollywood and Bollywood, provided India demonstrates the will to enforce protection of intellectual property.
The government’s move to rally support from G20 and Brics nations is sound. What India must prepare for is to give, not just take, when it comes to trade negotiations.