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India gains little from FTAs on services front

Economic Times, India

India gains little from FTAs on services front

By Sidhartha, TNN

22 October 2014

NEW DELHI: If you thought India’s services trade agreement with Asean is going to open the doors for Indian professionals to work in the 10-member trading bloc, you may be in for a surprise. Similar agreements with Japan and South Korea — which the government said will help Indian nurses, architects and even yoga professionals have not resulted in any visas.

While India and Japan and South Korea agreed and reduced customs duty on goods, the trade-off for allowing professionals has yielded no results as the two countries have not yet signed mutual recognition agreements that honour the educational and professional qualifications. Sources said protests from local pressure groups, such as nurses in Japan, have prevented even the commencement of negotiations, leave alone any agreement. So, the gains for India remain only on paper.

While architects and auditors are understandable, why services such as teaching of yoga were included is anyone’s guess. In the absence of standards that are recognized by Japan, the clause in the 1,083-page Comprehensive Economic Partnership Agreement (CEPA) is seen to be useless.

Although the CEPA with South Korea had sought to allow access to Indian engineers, consultants and other professionals, there has been limited success as recognition of Indian engineering colleges remained an issue.

In any case, with Asean, the government had given up the possibility of extracting significant benefits on the services front by delinking the goods negotiations, which did away with the possibility of any give and take.

While commerce department officials on Monday suggested that there was no surge in imports following the trade pacts, a senior official acknowledged that gains on the services front had not accrued.

An official who was part of the negotiations, however, said the government should pursue mutual recognition agreements. "If you agree to cut duties it does not mean the item will be imported. Similarly, it isn’t necessary that a services agreement will actually lead to an immediate use of the provisions," the official said.

A commerce department official, however, said Japan and Korea are reluctant to hold further consultations, rendering the services agreements useless