Connect with us
The clever new way to send money abroad

Business

Regional trading agreements: Good or bad for India?

The debate stems from the increased use of regional trade agreements (RTAs) in a world now ruled by an improved and disciplined multilateral trading system. The key question is whether these agreements will push the world toward discriminatory regionalism, or can be used as a vehicle for promoting multilateralism.

Published

on

exports

The proliferation of regional trade agreements has continued unabated since the early 1990s. In recent years, this has led to widespread debate on the advantages or disadvantages of regionalism over multilateralism.

The debate stems from the increased use of regional trade agreements (RTAs) in a world now ruled by an improved and disciplined multilateral trading system. The key question is whether these agreements will push the world toward discriminatory regionalism, or can be used as a vehicle for promoting multilateralism.

As of 31 July 2010, the GATT/WTO had been notified of some 474 RTAs, counting goods and services notifications separately. The structure of regional agreements varies hugely, but all have one thing in common — the objective of reducing barriers to trade between member countries. At their simplest, they merely remove tariffs on intra-bloc trade in goods, but more now go beyond that to cover non-tariff barriers and to extend liberalisation to trade and investment.

On the whole, the newer agreements tend to have deeper coverage, extending into areas of domestic disciplines beyond the exchange of tariff concessions, and a number of agreements now also cover the services sector and other areas of cooperation.

In this context, it is difficult to arrive at a clear conclusion on India’s stance on RTAs. To do so requires careful consideration of India’s place in the global economy, and the impact of potential trade diversion on its domestic industries. Traditionally, India has been a supporter of the multilateral system, but given the slow pace of negotiations and the developmental needs of its economy, it too has recently joined the RTA bandwagon.

Outside the South Asian region, India’s interest in trade liberalisation with the economies of East and Southeast Asia has grown. India signed a framework agreement on comprehensive economic co-operation with ASEAN in 2009 and several bilateral trade agreements with East Asian countries, including Comprehensive Economic Cooperation Agreement (CECA) with Singapore in 2005 and a free trade agreement with Thailand in 2003. The most recent initiative is the Comprehensive Economic Partnership Agreement (CEPA) with South Korea in 2009, comprehensive economic partnership Agreement with Japan in 2011 and India-Malaysia (CECA), also in 2011. Undoubtedly, these agreements will give a major boost to India’s trade and exports sector. But it is only later that the costly trade diverting effects of these agreements, if any, will come to the fore.

India’s increased involvement in RTAs comes despite concerns over the impact of participation on the domestic economy. The latest Economic Survey (2010-11) expressed concern about the trade diverting effects of RTAs on India’s trade. It says that though these FTAs benefit India’s exports, in some cases the benefits of the partner countries are much greater, with net gains of incremental exports from India being small or negative.

 

 

Author: Geethanjali Nataraj, NCAER

Geethanjali Nataraj is a fellow at the National Council of Applied Economic Research, India.

Read more from the original source:
Regional trading agreements: Good or bad for India?

East Asia Forum provides a platform for the best in East Asian analysis, research and policy comment on the Asia Pacific region and world affairs.

Click to comment

Leave a Reply

Business

China’s economy stumbles on power crunch

Published

on

BEIJING (Reuters) – China’s economy hit its slowest pace of growth in a year in the third quarter, hurt by power shortages, supply chain bottlenecks and major wobbles in the property market and raising pressure on policymakers to do more to prop up the faltering recovery.

(more…)
Continue Reading

Business

Thailand aims to push its games and content industry

After almost a year under the pandemic, the number of game players in Thailand rose to 32 million and helped the market generate over a billion dollars in 2020, according to NewZoo, an international analytics and market research group.

Published

on

Currently, key digital organizations involved in the economy are joining forces to push the Thai gaming industry, so as to attain the level of a regional hub.

(more…)
Continue Reading

Most Read

Recent