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India studying FTAs for unilateral trade preference to all LDCs

Financial Express, India

India studying FTAs for unilateral trade preference to all LDCs

Arun S

30 September 2006

NEW DELHI, SEPT 29: India has undertaken a study of its existing free trade agreements (FTAs) like Safta and the proposed ones like Asean FTA and Southern African Customs Union FTA.

This has been undertaken to finalise the norms for a unilateral trade preference (UTP) scheme to all least developed countries (LDCs) in Africa and also to some other such countries, which have no trade pacts with India. The UTP scheme is about unilateral offer of tariff concessions and easing other restrictions like non-tariff barriers on trade to give market access.

Sources said the study of FTAs is expected to give the authorities more clarity regarding the issues involved in the UTP scheme, including the sensitive and the negative list of products to be kept out of the ambit of the trade. They added that the other issues include the strengthening of the ‘rules of origin’ to help in the understanding the possibility of developed and developing nations routing their products through LDCs to gain market access in India indirectly.

According to the WTO Hong Kong ministerial declaration, all its member countries have to provide duty-free and quota-free (DFQF) access for at least 97% of products originating from LDCs by 2008.

The US, instrumental in the insertion of the figure 97%, is one of the main countries wanting the successful implementation of the DFQF access. It will soon be reviewing its list of beneficiaries, including India and Brazil, under its generalised system of preferences (GSP) scheme.

The scheme hands out certain advantages and favourable treatment to certain developing nations. Washington is of the view that India and Brazil have reached a comparably advanced stage of development.

Sources said the US might use the DFQF access implementation as a pressure tactic on India for New Delhi’s continued inclusion in Washington’s GSP scheme.

FE had earlier reported India’s plans to extend the UTP scheme to all African LDCs and to some other such countries to promote South-South economic cooperation. However, India will not offer any more incentives to the LDCs in south Asia, than what are being offered under the Safta.

Under Safta, the schedule for implementation of tariff reduction is 10 years for LDCs - Bangladesh, Bhutan and Nepal - while the same is 5-6 years for other countries. As per the United Nations, the socio-economic development indicators and the human development index of the LDCs are the lowest in the world. Thirty four of these 50 countries are located in sub-Saharan Africa, while 10 are in Asia. Bangladesh, Nepal, Bhutan and Maldives are among the LDCs under Safta.