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Trade policy to focus on Latin America, Africa

Times of India

Trade policy to focus on Latin America, Africa

By Sidhartha, TNN

25 April 2011

DHAKA: After Look East, India is now adding a ’Focus West’ chapter to its trade policy. Under increasing pressure from China, especially in Africa, New Delhi is now moving ahead with plans to sign three comprehensive economic partnership agreements (CEPA) that would include free trade pacts in goods and services. In addition, the government has started work on upgrading its preferential trade agreement (PTA) with Mercosur”comprising Brazil, Argentina, Uruguay and Paraguay”commerce & industry minister Anand Sharma said.

If all goes well, India wants to link Mercosur with its proposed pact with Southern Africa Customs Union (SACU), which comprises South Africa, Botswana, Namibia, Lesotho and Swaziland, the minister added.

But before that, India has identified potential trade deals with the 15-member Economic Community of West African States (Ecowas) and the 19-member Common Market of Eastern & Southern Africa (Comesa), which has four common members with SACU apart from Egypt, Kenya, Mauritius Congo and Sudan. A trade deal with these two blocs would mean giving concessions on products such as cotton as some of the poorest countries like Benin and Burkina Faso are essentially dependent on the export of a single product.

The move comes at a time when China is increasing its partnership with African and Caribbean nations, particularly those that are rich in minerals. Within the government, there is realization that India cannot be splurging billions of dollars in aid like China and would be better placed if it focuses on improving its trade ties. In recent years, India has signed a series of free trade agreements, starting with Singapore before moving to Asean, Malaysia, Korea and Japan. Deals with Indonesia and Thailand are in the pipeline, along with agreements with the European Union, Australia and Canada.

The proposals for enhanced engagement with countries in Africa and Latin America are expected to be discussed at the next meeting of the Trade and Economic Relations Council headed by Prime Minister Manmohan Singh shortly. Defending the government’s FTA push, Sharma said each agreement was signed after a thorough analysis and some tough negotiations.

Though Sharma did not talk of the Chinese threat, he said that it was in India’s interest to diversify its trade basket to increase the share of countries in Africa and Latin America, where exports grew 74% last year. The minister said India would look for a CEPA, which also includes agreements on investment and tax avoidance, but to begin with could examine expanding the scope of the existing PTA that covers around 450 products.

"We have a historical relationship with these countries and it is only natural that we take it to the next level. We are already doing it in the form of institutional support and capacity building," Sharma said.