A joint communication of four South Asian nations, including Bangladesh, has been moved at the World Trade Organization (WTO) ministerial meet on demand for a work programme facilitating low-cost cross-border remittance.
Bangladesh, India, Nepal and Sri Lanka submitted the demand note Tuesday at the ongoing 13th Ministerial Conference (MC13) of the world trade body in this city of the United Aran Emirates (UAE).
The communication was initially placed by India in the second week of February. Bangladesh, Nepal and Sri Lanka extended their support to the move, and so the four countries jointly submit a revised communication for adopting as part of MC13 declaration capping the talks.
Formally started on Monday morning at the Abu Dhabi National Exhibition Centre (ADNEC), the four-day high-level consultation on global trade rules is scheduled to conclude today (Thursday).
Welcoming the decision of the WTO Committee on Trade in Financial Services to hold a Thematic Session on 'Cost of Remittances' in March 2024, the four countries requested that the MC13 instruct the committee to undertake a work programme in six areas.
The six areas are as follows (i) understand the development impact of cross-border remittances (ii) review the cost of cross-border remittances, trends and developments (iii) consider how technology, emergence of new market players, different types of providers and new channels, and consumer behaviour are impacting the cross-border remittance services (iv) examine the drivers of cost of cross-border remittances and challenges associated with reducing it (v) identify the opportunities created for lowering the cost of cross-border remittances including on account of digitalisation, and emergence of new technologies (vi) explore ways to address the challenges and utilise the opportunities related to lowering the cost of remittance services.
The four countries of the subcontinent also recommend that the WTO committee maintain a standing agenda item in its meeting, and hold dedicated sessions, to implement the work programme with a view to suggesting steps that could be taken towards reducing the cost of remittances to the Council for Trade in Services which in turn will report to the General Council.
In this connection, the four members also underscored that MC13 instruct the General Council to review the outcomes of the work programme and report on key findings, actions undertaken and recommendations to the MC14.
In the communication paper, the four have mentioned that cross-border remittances have significant positive contribution towards the socioeconomic development of households and communities, especially in developing countries, including Least Developed Countries (LDCs). Also mentioned is that out of total remittances worth US$ 860 billion last year, around 78 per cent or US$ 669 billion went to Low and Middle-Income Countries (LMIC).
According to World Bank's latest Migration and Development Brief (released December last), "Remittance flows to South Asia are estimated to have grown 7.2 per cent in 2023 to reach $189 billion, tapering off from the over 12-percent increase in 2022. The increase is attributable entirely to remittance flows to India, which are expected to beat previous forecasts by $14 billion and reach $125 billion in 2023."
The joint communiqué further states that though the global average cost for sending remittances has declined over time, it remains high at 6.18 per cent. The rate is more than twice the UN-approved SDG target, and the experience varies across countries and regions.
Again, "the cross-border payments and money-transmission service are a critical financial service used by the senders and receivers for cross-border remittances, thus providing a point of contact with the financial sector that can be leveraged to increase access to other financial services, achieve financial inclusion and enhance participation in financial services trade."
In view of the close relationship between such services and sustainable development, the four countries have underscored reducing the cost of cross-border remittances.
"We reaffirm our commitment to the UN SDG Goal 10.c to reduce to less than 3.0 per cent the transaction costs of remittances and eliminate remittance corridors with costs higher than 5.0 per cent by 2030 with a view to achieving the primary goal target, that is, 'Reduce inequality within and among countries' which is aligned to the WTO's development agenda," they argued.
[The writer is in Abu Dhabi at the invitation of the Secretariat of the World Trade Organization (WTO) and Friedrich-Ebert-Stiftung (FES), Geneva.]
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