ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Trade Facilitation: Issues and Concerns

Following the Doha Ministerial conference countries from the European Union, Japan, Korea, the US, Hong Kong and Colombia have sought clarifications and made suggestions. As a possible multilateral agreement on trade facilitation is likely to take into account these proposals, it is important to understand what these clarifications are and how the suggested improvements will affect India.

India-Sri Lanka Trade

The Free Trade Agreement between India and Sri Lanka, though in a positive direction, does not address the issue of transaction costs that emanates from the transacting environment. Analysing the characteristics of formal and informal trading between India and Sri Lanka the study shows that transaction costs in formal trading are higher than for informal trading and suggests that lowering transaction costs in formal trade could enhance trade between the two countries.

India's Informal Trade with Nepal

The large and vibrant informal trade between India and Nepal continues to thrive despite trade liberalisation in the two countries. This calls for an in-depth analysis of the institutional mechanism that drives informal trade and the reasons for such trade to take place. An analysis carried out on the basis of a field survey in the border areas of Nepal and India reveals that informal traders have developed efficient institutional mechanisms for contract enforcement, information flows, risk sharing and risk mitigation. Analysing the relative importance of trade policy barriers vis-a-vis institutional and other non-economic factors influencing informal trade flows the study shows that informal traders provide better solutions to circumvent the inadequacies and inefficiencies of the formal trade channel.

Informal Trade in SAARC Region

Will the South Asian Free Trade Agreement (SAFTA) lead to a shift of informal trade from the unofficial to the official channel? Analysis of the magnitude and composition of trade flows and of the factors obstructing official flows to see how trade flows in the region would alter with the implementation of SAFTA.


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