WASHINGTON — U.S. Trade Representative Michael Froman said Thursday the U.S. has reached an agreement with India on a World Trade Organization pact aimed at reducing trade barriers and eliminating border transaction costs, breaking an impasse that had put a broader global pact in limbo since July.
Froman said the U.S. and India had “consulted intensively” in recent days to find a path forward on the Trade Facilitation Agreement, which by some estimates could increase global trade by $1 trillion by cutting red tape that impedes the flow of trade.
The deal was unveiled as both President Obama and Indian Prime Minister Narendra Modi were visiting Myanmar Thursday for a high-level trade summit.
“In July, efforts to realize this agreement hit a snag when a small group of countries led by India took a position that prohibited the Trade Facilitation Agreement from moving forward and along with it, jeopardizing the rest of the Bali package,” Froman told reporters on a conference call Thursday. “We remained steadfast in our commitment to find a way forward on the Trade Facilitation Agreement and as a result of that effort, we are pleased to announce that we’ve reached agreement with India that will break the logjam and give new life to the multilateral trading system.”
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Froman said the breakthrough came after officials were able to “eliminate ambiguity” around a food security clause on the right to stockpile food in a broader WTO package reached in Bali in December. India’s concerns over the food security clause led the country to block the TFA from moving forward.
The agreement on the TFA and “understanding on food security” will go to WTO director-general Roberto Azevêdo for review. The full WTO membership must approve the elements agreed upon between the U.S. and India before full implementation of the TFA or the broader Bali deal.
The TFA would expedite the release of goods, establish a single transaction point for importers and exporters to submit documentation and/or data requirements through a single entry point of the participating authorities or agencies post-clearance. It would also allow for WTO members to apply streamlined customs procedures and uniform documentation requirements for release and clearance of goods.
“With this deal in hand, we can now finally move forward with an agreement that, according to a recent World Economic Forum study, will save the world economy $1 trillion,” said Juanita Duggan, president and chief executive officer of the American Apparel & Footwear Association. “Everybody who wears clothes and shoes will benefit from these savings in the form of lower prices and a wider selection of higher quality garments and footwear.”