FTAs: so near and yet so far
The Hindu | 2 June 2008
FTAs: so near and yet so far
The government looks at FTAs and regional trade blocs as building blocks.
Last December, Commerce and Industries Minister Kamal Nath said that the Free Trade Agreement (FTA) with the Association of Southeast Asian Nations (ASEAN) will be wrapped in a matter of months - and concluded before the next annual meeting. But there still appears to be a spanner in the works. The deadline is being extended by three or six months every time, but the impression that is sought to be created is that ‘We are almost there’ - so near and yet so far.
No breakthroughs
Though the Union Government has been pushing for an FTA with many countries on a bilateral basis, and also with regional blocks like ASEAN and the EU, there have been no major breakthroughs. Even existing bilateral FTAs with countries such as Sri Lanka frequently run into problems, with domestic trade and industry complaining about losing their market or competitive edge.
While the Centre takes a political initiative with regard to Least Developed Countries such as Nepal and Bhutan, or strategically important countries such as Sri Lanka and Singapore, it does not push the other FTAs beyond a point. Industry representatives also get involved in working out the nuts and bolts of these agreements. “It is not always possible to keep the balance of trade as the primary criterion for finalising such agreements. The government looks at FTAs and regional trade blocs as building blocks and incremental growth towards global trade and a global free trade area. It is part of the preparation of domestic trade and industry for that objective,” explains a senior official in the Commerce Ministry. He says that the Ministry of External Affairs, industry bodies, and the Indian missions in those countries also get involved in the discussions and the details, with the objective of protecting national interests.
Specifically on the Indo-ASEAN FTA, an industry source associated with the discussions say: “We are not getting anything in return for the concessions that we are prepared to offer. As a group, we find Singapore and Malaysia as the main markets, with Vietnam to some extent. Trade with Myanmar is mostly through Singapore. Indonesia has major problems and does not want to compromise. Thailand appears to be a closed market, and we have not accessed the Philippines at all. Palm oil remains the major stumbling block. But the basic question is what can we export to those countries?”
Prime Minister Manmohan Singh and the ASEAN leaders want the FTA to be clinched ahead of the next summit. But industry and officials have to sort out these problems and strike a compromise before any agreement can be inked.
Major initiative
Similarly, a major initiative has been launched with the 27-member European Union for an FTA. India has presented a document related with the negotiations that have begun. According to Peter Power, spokesperson for the EU Trade Commissioner, there is no time frame for the talks. “I can confirm we have received a document from India. I can confirm that it is certainly a useful and worthwhile opening bid for negotiations that will have to go further and deeper. A lot of work remains to be done to have an agreement that would be worth of support by both sides. We should hope to see substantial movement in the next year to 18 months.” .
Similarly, India seeks to evolve an FTA with the African bloc, the Latin American countries, and the North American trade block. All these are outside the main WTO negotiations that keep breaking down frequently after the Doha round.
V. JAYANTH
