ADB asks the flurry of FTAs to be stringed together
Business Standard | May 4, 2013
ADB asks the flurry of FTAs to be stringed together
A lack of awareness on FTAs has led to the under-utilisation of trade deals by the small and medium enterprises
Nayanima Basu | Greater Noida (Uttar Pradesh)
The Asian Development Bank (ADB) today said the government should start thinking about consolidating the flurry of free trade agreements (FTAs) it has implemented or is negotiating, by bringing all deals under one mega agreement.
“India should start multilateralisation of all the FTAs it has signed or is going to sign. By doing this, it will not have to worry about ratifying them and put an end to all sorts of trade diversion,” said Jayant Menon, lead economist (trade and regional cooperation), Office of Regional Economic Integration.
Menon said a lack of awareness about the benefits of FTAs have led to much less utilisation of such trade deals. As a result, the small and medium enterprises have not been able to benefit, while the bigger multinational firms have utilised those.
Menon said the utilisation rate of FTAs has hovered between 15 and 25 per cent for India, when it should have been 100 per cent.
On the impending India-European Union FTA, negotiations for which started in 2007, Menon said some of the demands made by the European Union concerning data content and protection of intellectual property rights are difficult for Asian countries to implement at this point of time.
“So I feel a country should not go for trade liberalisation without strengthening its domestic industry.”
Menon also added that one of the reasons why India has not able to gain much more from the FTAs is because it has failed to address some of the domestic constraints and that fiscal disparities amongst states have also been a major problem.
“India has to join the factory-Asia network of South and Southeast Asian countries if it has to go for trade liberalisation,” Menon said.
