New Delhi, Sep 11 (IANS) After his talks with Union Finance Minister Nirmala Sitharaman, visiting UK Chancellor Jeremy Hunt on Monday said that the Free Trade Agreement (FTA) between India and Britain will be finalised soon.
1975-2004: In this phase, the focus was on reducing tariffs to promote merchandise trade. India embarked on its FTA journey in 1975 by signing the Bangkok Agreement with Bangladesh, Sri Lanka, and S Korea. This evolved into the Asia-Pacific Trade Agreement (APTA) in 2005 with China’s inclusion. APTA stands out as the sole trade pact that grants concessions on Chinese goods entering India.
Additionally, India joined the Global System of Trade Preferences (GSTP) in 1989, involving 43 other developing countries in exchange of tariff concessions. Unfortunately, awareness of these concessions among Indian exporters is limited. India also signed the South Asian Association for Regional Cooperation (SAARC) Preferential Trading Arrangement (SAPTA) in 1993 to boost trade with immediate neighbours, including Afghanistan, Bangladesh, Bhutan, Maldives, Nepal, Pakistan, and Sri Lanka. APTA, GSTP and SAPTA agreements are known as Preferential Trade Agreements because of limited trade coverage.
An agreement is called a Free Trade Agreement (FTA) when tariff concessions are exchanged on substantial trade. It was not until 1998 that India signed its first FTA with Sri Lanka, facilitating access to the Indian market. These efforts were part of India’s strategy to enhance economic integration in South Asia.
2004-2022: This phase shifted focus towards comprehensive pacts covering not only goods but also services, investments, and other subjects. In 2005, India inked its first Comprehensive FTA with Singapore, the Comprehensive Economic Cooperation Agreement. Singapore’s cooperation paved the way for India to sign an FTA with ASEAN in 2010. Further, India signed Comprehensive Economic Partnership Agreements with South Korea (in 2010), Japan (2011), and Malaysia (2011).
Between 2012 and 2021, India did not sign any new FTAs as it was actively engaged in negotiations with various countries and groups, including the EU, EFTA, Australia, and New Zealand. India also decided not to join the Regional Comprehensive Economic Partnership (RCEP) due to concerns over imports from China, insufficient safeguards for domestic industries, and lack of flexibility on issues like automatic tariff triggers rules of origin. The Indian government felt the risks of joining RCEP outweighed the potential benefits.
The dry spell ended in 2021 when India signed FTAs with Mauritius, UAE and Australia in the next two years.
2023 onwards: This phase marks a shift in focus from east bloc countries to western nations, many of which are developed.
The priorities are countries such as the UK, EU, Israel, Switzerland, and the US. Negotiations will also encompass new issues such as environment, labour, intellectual property rights, digital trade, government procurement, competition, and gender.
Broadly, two types of measures are negotiated in trade pacts. Border measures include eliminating customs duties on products from the partner countries. And behind the border measures that deal with harmonising domestic regulations of members. The new issues are essentially behind the border measures that will impact domestic policy and regulations.
Indo-Pacific Economic framework is the most recent trade agreement India is negotiating with the US and 14 others. IPEF does not negotiate market access through tariff negotiations but focuses only on new issues. From the Bangkok agreement (or APTA) to IPEF, India’s FTA journey has evolved significantly, reflecting its commitment to foster international trade and economic integration within its region and with global partners.
These phases demonstrate India’s adaptability and willingness to explore new avenues for economic growth and cooperation on the international stage
By Ajay Srivastava