FTAs open up sizeable opportunities, shows study
Financial Express, India
FTAs open up sizeable opportunities, shows study
CORPORATE BUREAU
15 July 2005
NEW DELHI, JULY 14: The explosive surge in India’s engagement with FTAs/PTAs is attributed to expectations of greater market access for India’s goods and services through preferential deals, positive impact of regional liberalisation for accelerated domestic reforms, promotion of political, security and strategic objectives, according to a Ficci study.
The study, ‘India and Free Trade Agreements: Issues and Implications,’ points out that FTAs open up sizeable opportunities for Indian business. For instance, Safta opens up a combined market with $750 billion strong GDP and 1.4 billion population and holds the prospect of formalising unofficial trade.
Likewise, the Bangkok Agreement has created a market of over 2.5 billion people. Bimstec has a combined GDP of about $800 billion. Mercosur with its 210 million plus population and an aggregate GDP of $1 trillion offers enormous opportunities for Indian trade and industry and the India-Asean FTA is aimed at raising the merchandise trade turnover to $30 billion by 2007.
Not surprisingly, therefore, apart from the ongoing discussions on India-Asean CECA, Safta, Bimstec, India-Mercosur PTA and India-Chile PTA, as many as 12 FTAs/PTAs are currently under various stages of consideration, the study has noted.
The FTAs under consideration include one with the Gulf Cooperation Council, China, South Korea, Japan, Malaysia, Pakistan, Mauritius, Southern African Customs Union, Egypt, Israel, Russia and Australia. According to the study, FTAs also result in increased share preferential imports compared to imports. For instance, Western Europe’s share of preferential imports to total imports stood at 64.7% in 2000. (This is expected to rise to 67% in 2005).
In comparison, transition economies had a share of 61.6% in 2000 (slated to remain the same in 2005); North America (including Mexico) 41.4% (51.6%); Africa 37.2% (43.6%); Middle East 19.2% (38.1%); Latin America (excluding Mexico) 18.3% (63.6%); Asia 5.6% (16.2%).Worldwide, the share of preferential imports through FTA in total imports is set to rise to 51.2% in 2005 from 43.2% in 2000, the study said.In Asia-Pacific, the study says India has been the prime mover of FTA activities in S. Asia. Japan, a late starter in the FTA arena, has acquired prominence of late. Asean is pursuing FTAs with the USA, Japan, China, India, Korea, Australia and New Zealand. Singapore has been pushing hard to negotiate and conclude several FTAs.
Thailand, Korea, China, Australia and Malaysia are in various stages of FTA negotiations.
