More FTAs waiting in the wings - India
Financial Express, India
More FTAs Waiting In The Wings
HUMA SIDDIQUI & AMITI SEN
3 August 2004
The finalisation of modalities for implementation of the Indo-Thai free trade agreement (FTA) on Friday sends out clear signals that the United Progressive Alliance (UPA) is not averse to the idea.
Although Prime Minister Manmohan Singh has gone on the record that the existing FTAs that India has signed need to be reviewed and analysed, this can’t be interpreted to mean that the government is unwilling to pursue the agreements.
While the Indo-Sri Lanka FTA is the only one which has been implemented so far (to be followed by the Indo-Thai FTA in September), there are at least 10 that are in the pipeline. These include FTAs with Singapore, Mauritius, Merco-sur (Brazil, Argentina, Uru-guay, Paraguay), South Asia Free Trade Agreement (SAF-TA), BIMST-EC, China, Gulf Cooperative Council, Iran, and South Africa Customs Union (SACU). Majority of these have been signed this year.
While most of the FTAs cover trade in goods, India is becoming more ambitious and is gradually moving into the next stage of signing Compreh-ensive Economic Partnership Agreements covering services and investment.
The free trade talks with Singapore is one such agreement, which includes a free trade area, plus services, investments and sectoral co-operation in areas like tourism. According to India’s High Commissioner to Singapore Alok Prasad: “The talks have been a learning exercise for India and an agreement is expected to be reached fairly quickly.”
Although the 700-page Comprehensive Economic Cooperation Agreement (Ceca) being worked out between India and Singapore is facing some turbulence over the issue of investment, Mr Prasad is optimistic that things will be sorted out soon. “Given the scale of the work at hand, the pace at which things are moving is not bad at all. We expect to be able to conclude the agreement fairly quickly,” he said.
Earlier this year, India and China formally launched talks to study the feasibility of signing a bilateral FTA as well as a Ceca to cement their ties.
Senior officials from the two sides discussed the possibility of signing a FTA and Ceca during the first meeting of the Sino-Indian Joint Study Group (JSG) on trade and economic co-operation in Beijing in March. This was followed by another meeting in New Delhi in July. “The talks are at the initial stages and a lot of groundwork needs to be done before we know how much can be achieved,” a JSG member said.
Another agreement signed this year relates to establishing a South Asian Free Trade Area among the seven countries in the region. It will become operational by January 2006. Tariffs will be brought down to 0-5 per cent in the next 7-10 years.
In a bid to strengthen economic ties with its neighbours in the Bay of Bengal region, India signed an FTA with Bangladesh, Myanmar, Sri Lanka, Nepal, Bhutan and Thailand (BIMST-EC) in February 2004. This was recently formalised at the first summit-level meeting in Bangkok where the future plan of action was discussed.
India signed a framework agreement with ASEAN in October 2003 to establish a Free Trade Area in 10 years covering goods, services and investment. Progressive tariff reduction under the Early Harvest Programme will begin in November 2004 and tariff elimination will be completed by October 2007.
India is also aiming at strengthening economic relations with the Gulf countries, primarily for increasing its access to the region’s oil resources. During the Indo-GCC conference in Mumbai in February 2004, the ministers from GCC countries sought closer economic and commercial co-operation with India. Following this, discussions have started for a framework agreement, which could eventually lead to a FTA.
South America is another region which India wants to tap. A PTA was signed with Mercosur trade block on January 27, 2004 which is meant to lead to a FTA later. The country is also negotiating a PTA with Chile, which is expected to be signed later this month.
India has made forays into the African continent as well. Framework agreements for co-operation have been signed with the South Africa Customs Union (SACU) and Common Market for Eastern and Southern Africa (COMESA) in Africa. According to MEA joint secretary R Vishwanathan, negotiations were in preliminary stages and it will take at least two years before something is finalised.
The country has also signed a MoU with eight West African countries called TEAM-9 (Burkina Faso, Chad, Equatorial Guinea, Ghana, Guinea Bissau, Ivory Coast, Mali and Senegal) in March this year for economic, commercial and technical co-operation.
A strategic trilateral group IBSA (India, Brazil and South Africa) was also formed with the two emerging powers of Africa and Latin America to promote economic, commercial and political co-operation and to advance their common interests globally.
Framework agreements for economic co-operation have been signed with Andean Community, Caricom (Caribbean Community) and Central America.
Agreements under consideration include a PTA with Iran and a Ceca with Mauritius.
