Financial Express (India)
FTA with China likely to get a fresh look
Task force soon to assess impact of trade agreement between Asian giants
Friday, August 19, 2005
NEW DELHI, AUG 18: Indicating that the idea of a free trade agreement with China has not been abandoned, the government has begun a fresh exercise to explore the pros and cons of such an accord.
A high-level task force would be set up soon to comprehensively assess how a Sino-India FTA would impact Indian economy.
Government sources said the commerce department has already written to the department of economic affairs suggesting that an inter-ministerial task force be set up to examine the issue afresh. It may be noted that the two countries had earlier made a cursory analysis of the proposed FTA’s implications through a joint study group.
However, with many sections of the domestic industry fearing that the FTA could have serious negative fallouts, commerce minister Kamal Nath had lately suggested that such an agreement was not imminent. For an FTA with China, both countries should have market economies, he had said.
Sources said the task force would now explore in detail the risks and benefits of the free trade pact, with sector-specific analysis. Industry associations and all other stakeholders would be co-opted in the exercise.
WEIGHING THE PROS AND CONS
• China keen on free-trade agreement, but Indian industry is apprehensive
• All stakeholders including industry to be taken on board
• Move comes after commerce minister saying the “FTA would not work”
• Domestic industry fears serious negative fallout
• Sources said the task force would now explore in detail the risks and benefits of the FTA, with a sector-specific analysis
China has been consistently pushing for the FTA. During his recent visit to India earlier this year, Chinese prime minister Wen Jiabao had reiterated his country’s desire to enter into such a pact.
It is believed that Sino-India FTA would form the biggest free trade region in the world.
The bilateral trade between the two countries had increased by 650% over the past five years. An FTA, it is reckoned, would increase the bilateral trade to $130 billion by 2010.