HOW FAR FREE TRADE AGREEMENTS (F T A s ) ARE FREE ?

 FTAs

FreecTrade Agreements (FTAs)  are reached between two or more countries in order to eliminate Trade barriers both tariff and non tariff barriers to make Trade and business smooth across  national borders. FTA s  between countries can cover Trade in goods, trade in services, investment and intellectual property Rights. FTAs can be either bilateral or multilateral depending on whether two or more countries agreed to the Trade Agreement. At the same time each member can retain its own trade and tariff restrictions and commercial policies With non member countries as per their discretion and benefit. 

FTAs AND INDIA 

India has signed 13 regional Trade Agreements (RTAs) in addition to bilateral Trade Agreements or FTAs with various groups,individual countries namely Japan, South Korea,UAE and United Kingdom  UK. Indo-Japan comprehensive Economic Partnership Agreement (CEPA) signed in 2011 resulted in positive, negative and mixed impacts on both trade and investment flows  between both countries. Even though India's trade deficit with Japan has increased sectors like information technology, Pharmaceuticals and Biotechnology benefitted much because of Japanese technology and investment in infrastructure and manufacturing. The basic objective of Indo Korean  FTA  agreement  was to liberalise and facilitate free trade in goods,services and promote investment.Both Japan and South Korea invested in automobile sector in India.  On10th March 2024 members of the European Free Trade Association- Iceland,Liechtenstein ,Norway and Switzerland and India signed Cmprehensive Trade and Economic Partnership Agreement.  India UAE CEPA ensured duty free access to over 90% of India's exports  comprising of textiles gems and jewelry and Pharmaceuticals. CEPA  with UAE led to vital strategic partnership in trade and investment, digital infrastructure, fintech, energy infrastructure, culture and people to people ties as well.With regard to developing knowledge and talents Indias premier higher education institutions like IIT Delhi  is planning to have campus in Abudhabi. Infact India's exports to UAE grew 12% in the first year of CEPA implementation.Strategic Partnership between  India and UAE is bound to sustain as long asthe close relationship between two countries remains strong and intact.Similarly India Australia Economic Cooperation and Trade Agreement (ECTA) by lowering trade barriers increased FDI inflows to India in vital areas including technology, manufacturing and infrastructure. On the otherhand easy access to Indian professionals to sectors like like IT and health care sectors  provided  India access to advanced Australian technology in sectors like renewable energy.ECTA is expected to reduce carbon emissions in India. India Singapore CECA has particularly  helped Indian SMEs in sectors like engineering and IT .

INDO UK FTA

Recently Government of India concluded a free trade agreement (FTA) with UK describing it as huge economic win and a land mark victory, first FFTA after Brexit. Eventhough  the final print of the agreement is awaited market access to textiles,garments and   handicrafts  is  expected. Pharmaceutical industry is very important for India  because generics provide a  thriving market, despite the fact that we failed to develop a single molecule so far. Here we are not sure about Intellectual Property Rights (IPR) particularly accounting for process related manufacturing. For India as athe  major makers generic drugs accessibility of it to  UK market is very vital. In fact India has been experiencing trade surplus both in goods and services against UK in terms of engineering goods, apparels, electronics, gems , and jewelry etc in goods and consultancy, BPO,travel telecommunications etc in services. In apparels abolition of tarrif by FTA will enable India to compete with Bangladesh.Simlarly potential growth in exports of ready made garments, gems and jewelry, footwear and leather goods , obviously would generate more employment opportunities in India .On the other hand UK is expected to benefit by exporting alcoholic beverages, cosmetics and automobiles intended to cater to the requirements of middle and high income group in India. Apart from losing tariff in auto industry India  should see that auto imports from UK is not stretched much so as to avoid  adverse impact on our  thriving small car industry.The overall impact of FTA by India with UK is expected to increase UK GDP by .1% , rise in wage rate ,and trade by 38% growth. Infact,  most of the analysts believe that India UK FTA is likely to bring win win situation for  both countries by enhancing goods and service trade and investment. 

FINAL OBSERVATIONS 

In the absence of a effective and efficient multilateral trading system countries are seeking refuge in free trade agreements. Formerly WTO has been providing a reasonable and rational multilateral trading system benefitting member countries including dominant countries like China and US. Now it has been in paralysis particularly with objecions to it's Dispute Settlement system particularly raised by US. In the global economic scenario China continues to be at commanding heights dominating world economy as the factory of the world producing 60 - 70 % of global production , clothe  60- 70 % along with Electric Vehicles. electronics, computers, smartphones, integrated circuits etc. Estimated FDI flows to China is about twenty five times higher than that to India. Obviously in global supply Chains Chinese presence is much significant. Uncertain tariff policy particularly reciprocal tarrif followed by US in recent times created distortions in trade and investment flows to some extent .Greatest advantage of FTA is that it provides market access to our goods and services in the partner country. Even if it is not frequently generating trade surplus if it promotes new investment, rejuvenating certain sectors  it is very much beneficial. For instance India's FTA with Japan and South Korea were always generating trade  deficit for India. On the contrary firms from these two countries substantially contributed to thriving of automobile sector in India. Simillarly new FTA between India and UK are expected to generate substantial trade and investment flows to India generating trade surplus and investment. Periodical review can be undertaken to assess the impact of FTA and necessary corrective measures can be made with the consent of both partners .


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