The Union Minister of Commerce and Industry of India recently participated in the G7 (Group of Seven) Trade Ministers Meeting held in Osaka, Japan. The G7 is an intergovernmental organization featuring the largest advanced economies of the world, including the UK, Canada, France, Germany, Italy, Japan, and the US. This influential group, founded in 1975, meets annually to discuss issues of common interest such as global economic governance, international security, and energy policy.
Enhancing Supply Chain Resilience
During the meeting, India presented several suggestions on enhancing supply chain resilience, an area that has increasingly gained importance due to the disruptions caused by the Covid-19 pandemic and geopolitical events. These disruptions have exposed the vulnerabilities of existing supply chains resulting in increased commodity prices and global inflation. To mitigate these issues, India appealed for a collaborative approach towards developing a regulatory framework that would facilitate smoother cross-border trade and supply chain movement.
Mapping Global Value Chains
In response to the concerns raised during discussions, India referred to the Generic Framework for Mapping of Global Value Chains highlighted in the New Delhi Declaration of the G20. This suggested tool can help member countries identify risks and improve trade resilience.
Public-Private Partnership and Digitalisation of Supply Chains
India emphasised the need for investment in critical infrastructure and encouraged Public-Private partnership. Highlighting the role of innovation, it also advocated for the digitalization of supply chains to enhance efficiency and transparency.
Negotiations on Free Trade Agreement
Parallel to the G7 meeting, India and the UK reviewed the progress of the proposed Free Trade Agreement (FTA). An FTA is an agreement between two or more nations aiming to reduce barriers to imports and exports among them, fostering a free trade policy. Both parties are keen to resolve differences on issues such as Rules of Origin and the services sector.
Trade and Economic Partnership Agreement
India engaged in talks with ministers from the European Free Trade Association (EFTA) member countries, namely Switzerland, Norway, Iceland, and Liechtenstein. These discussions were aimed at evaluating the progress of the Trade and Economic Partnership Agreement (TEPA).
G7 and Global Economy
The G7 countries play a critical role in global trade. For instance, the US and Germany, recognized as major export nations, sold goods abroad worth over a trillion US dollars in 2021. As a bloc, the G7 countries accounted for around 30% of the global Gross Domestic Product (GDP) in 2022. However, the proportion is projected to decrease to approximately 28% in 2027. By contrast, the GDP of G20 countries, excluding the G7, is estimated to reach 44.5% of the global GDP, marking a near two-percentage-point increase from 2022.
Different Types of Trade Agreements
Trade agreements can take various forms apart from FTAs, including the Preferential Trade Agreement and Comprehensive Economic Cooperation Agreement. The concept of a Comprehensive Economic Partnership Agreement (CEPA) is also gaining ground, which represents another form of establishing and enhancing free trade among nations.
