India’s position on trade agreements is under scrutiny after a group of 12 countries, led by the United States, reached a tentative agreement on the Trans-Pacific Partnership (TPP) earlier this week, says Singapore’s DBS Bank in its daily economic report on 9 Oct 2015.
While ratification of the TPP by the signatory countries and other processes are expected to delay its implementation by a few more years, nonetheless India’s patchy track record on free-trade agreements is feared to hurt country’s goals to double exports to US$900 billion over the next five years.
India has signed free trade and cooperation agreements with three of the 12 TPP-member countries. It is also negotiating with the 10-member country Association of South East Asian Nations (ASEAN) on a separate Regional Comprehensive Economic Partnership (RCEP), which includes China but not the US.
India had expressed plans earlier in the year to join the Pacific Economic Cooperation (APEC), but there has been little material progress since then. The TPP is a sub-set of the APEC bloc.
Focus has also been on pushing forth with other key pacts, especially with the European Union. However, progress has been slow on the pact with the European nations, noted DBS.
The Indian government has taken active interest in forging deeper international ties since assuming office last year, especially to attract foreign investments for infrastructure and manufacturing facilities.
But again progress on bilateral/multilateral trade pacts particularly has been tricky, given the tough choice between maintaining controls on certain strategic aspects, including agriculture, pharma, intellectual property rights, services etc. or provide a seamless/low barriers’ access to domestic sectors.
Authorities in India have leaned towards the former in recent negotiations, suggesting that the push to conclude more trade pacts will evolve at a cautious pace, according to the report.
Close to a quarter of India’s merchandise exports head to the US and ASEAN countries last year, with another four per cent to key Latin American markets.
Concern is whether improved market access, tariff reductions and diversion of service trade between the TPP members, as and when it becomes effective, might erode India’s market share, said the bank.
India’s exports, especially textiles and leather products might face threats, as countries such as Vietnam and Malaysia get cheaper access to the US and other markets covered by the deal, as cited by the press reports and a think tank estimates.
An international study group has pegged the near-term damage to exports at about US$50 billion, however the real impact is likely to smaller as the TPP is likely to take years to implement.
Overall, given the weak global demand backdrop, collapse in commodity earnings, domestic bottlenecks and cautious stance on trading pacts, meeting the government’s ambitious target to raise India’s share in global trade to 3.5 per cent by 2020, from two per cent presently, will be an uphill task. fii-news.com
While ratification of the TPP by the signatory countries and other processes are expected to delay its implementation by a few more years, nonetheless India’s patchy track record on free-trade agreements is feared to hurt country’s goals to double exports to US$900 billion over the next five years.
India has signed free trade and cooperation agreements with three of the 12 TPP-member countries. It is also negotiating with the 10-member country Association of South East Asian Nations (ASEAN) on a separate Regional Comprehensive Economic Partnership (RCEP), which includes China but not the US.
India had expressed plans earlier in the year to join the Pacific Economic Cooperation (APEC), but there has been little material progress since then. The TPP is a sub-set of the APEC bloc.
Focus has also been on pushing forth with other key pacts, especially with the European Union. However, progress has been slow on the pact with the European nations, noted DBS.
The Indian government has taken active interest in forging deeper international ties since assuming office last year, especially to attract foreign investments for infrastructure and manufacturing facilities.
But again progress on bilateral/multilateral trade pacts particularly has been tricky, given the tough choice between maintaining controls on certain strategic aspects, including agriculture, pharma, intellectual property rights, services etc. or provide a seamless/low barriers’ access to domestic sectors.
Authorities in India have leaned towards the former in recent negotiations, suggesting that the push to conclude more trade pacts will evolve at a cautious pace, according to the report.
Close to a quarter of India’s merchandise exports head to the US and ASEAN countries last year, with another four per cent to key Latin American markets.
Concern is whether improved market access, tariff reductions and diversion of service trade between the TPP members, as and when it becomes effective, might erode India’s market share, said the bank.
India’s exports, especially textiles and leather products might face threats, as countries such as Vietnam and Malaysia get cheaper access to the US and other markets covered by the deal, as cited by the press reports and a think tank estimates.
An international study group has pegged the near-term damage to exports at about US$50 billion, however the real impact is likely to smaller as the TPP is likely to take years to implement.
Overall, given the weak global demand backdrop, collapse in commodity earnings, domestic bottlenecks and cautious stance on trading pacts, meeting the government’s ambitious target to raise India’s share in global trade to 3.5 per cent by 2020, from two per cent presently, will be an uphill task. fii-news.com
