The Hindu Business Line : Adjustment aid mooted to tackle free trade impact

Mr Jairam Ramesh, Minister of State for Commerce and Power, with Dr M. Kawai, Dean, ADB Institute, Tokyo, releasing the ADB report on ‘Emerging Asian regionalism’, in the Capital on Monday.

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New Delhi, Sept. 29 Asian Development Bank (ADB) could create an adjustment assistance window for industries that are impacted by free trade agreements (FTAs) and under threat of a fall in their market share, Mr Jairam Ramesh, Minister of State for Commerce, suggested here on Monday.

Addressing a conference on ‘Emerging Asian Regionalism: ASEAN-India FTA and Beyond’, organised by ADB and Research and Information System for Developing Countries (RIS), Mr Ramesh said that some form of adjustment assistance was necessary to make regional trade agreements sustainable on a long run.

In fact, Mr Ramesh even suggested that the concept of adjustment assistance should be built in the very structure of the trade agreements. Noting that international trade brought macro gains to the country, he at the same time pointed out that it has also inflicted micro pains.

Report on regionalism

On the occasion, the Minister released an ADB report on Emerging Asian Regionalism. He said that India had the maximum number of FTAs at about 30 — 8 concluded, 10 under negotiation and 12 proposed — in the Asian region. “We don’t have much trade, but we have many agreements,” the Minister quipped.

Mr Ramesh said the formal signing of the India-ASEAN FTA will take place around December 18.

He highlighted that India had shown remarkable flexibility in negotiating this FTA, had very liberal rules of origin and a liberal approach to tariff heading considering that the country ran huge trade deficit with ASEAN.

In 2007-08, India’s exports to ASEAN ten countries were $16 billion, while imports were to the tune of $24 billion.

The Minister pointed out that the India-ASEAN FTA as of now was only on trade in goods, which was not where India’s competitive advantage lies vis-À-vis ASEAN. He expressed hope that as soon as the FTA with ASEAN is signed, negotiations would begin on services and investment as well.

Ban on Pak FDI

Meanwhile, speaking to reporters on the sidelines of the event, Mr Ramesh indicated that the current ban on foreign direct investment from Pakistan would be reviewed. “Since investments are considered to be the locomotive of regional integration, we should consider lifting the restriction. It could be done on a case-by-case basis through the Foreign Investment Promotion Board route. The security concerns can be addressed,” he said.

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