Bilateral and Regional Cooperation

Multilateral trade agreements are the first best solutions for deepening global trade and development as they are founded on the core principles of non-discrimination. Regional trade agreements (RTAs) are efforts by nations aimed at deepening economic relations, usually with neighbouring countries, and tend to be largely political in nature. With the multilateral trade negotiations process under the WTO being a painfully slow one requiring broad-based consensus, RTAs have progressively assumed greater importance and a growing share in international trade. While RTAs are broadly compliant with WTO mandates and remain broadly supportive of the WTO process, they remain second-best solutions that are discriminatory in nature against non-members and are inefficient as low cost producing non-members lose out to members.

While bilateral RTAs have no equity considerations, mega-regional trading groups may not necessarily be equitable if membership is diverse and small countries may lose out either way�if they are part of it they may not have much say and if they are not, they may stand to lose. India has always stood for an open, equitable, predictable, non-discriminatory and rule-based international trading system and views RTAs as building blocks in the overall objective of trade liberalization as well as complementing the multilateral trading system under the WTO. The Trans-Pacific Partnership (TPP) agreement is one new mega-regional block that has become a reality and has implication for India.

The 12 Pacific Rim nations (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the US and Vietnam) signed the TPP agreement on 5 October 2015. It is likely to set higher standards for goods and services trade. It is considered a mega regional FTA which can be a pioneer in many ways. The TPP is likely to be a game-changer for the world economy and global trade. The 12 members of the TPP account for around 40 per cent of global GDP and around 60 per cent of merchandise trade. In terms of economic size, the TPP is larger than the existing North America Free Trade Area (NAFTA).

The TPP trade agreement is very comprehensive and not only encompasses the scope of tariliminating mega regional trade pacts, but also aims at setting higher global standards for international trade through lower benchmarks for non-taribarriers, more stringent labour and environment regulation, higher intellectual property rights (IPR) protection, greater transparency in government procurement and limiting advantages to state-owned enterprises (SOE) and transparency in health care technology, competitiveness and supply chains. It includes new and emerging trade issues and cross-cutting concerns such as internet and digital economy and participation of SOEs in global trade and investment. In the short run, the trade impact of the TPP may not be seriously adverse but careful analysis is required for adapting and responding to the challenges in the long run. Many institutional analyses have focused on the implications for India.

So far, India has signed 10 FTAs and six preferential trade agreements (PTAs) and these FTAs/PTAs are already in force. The net impact of the RTAs on export performance and trade outcome is a mixed bag and requires detailed analysis. A gradual approach of widening the process of negotiating 19 FTAs (including review) is under way.

India�s Proposed New RTAs

  • India-Thailand Comprehensive Economic Cooperation Agreement (CECA)
  • India- New Zealand FTA/CECA.
  • India–SACU (South Africa, Botswana, Lesotho, Swaziland and Namibia) PTA
  • BIMSTEC (Bangladesh, India, Myanmar, Sri Lanka, Thailand, Bhutan and Nepal) FTA
  • India-Canada FTA
  • India–Australia CECA.
  • Regional Comprehensive Economic Partnership (RCEP) Agreement among ASEAN + Six FTA Partners (Australia, China, India, Japan, South Korea and New Zealand)

Written by princy

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