Through his book Free Trade Agreements: India and the World, VS Seshadri, a career diplomat and an expert in international trade and economics, takes readers on a comprehensive journey through the origins and evolution of Free Trade Agreements (FTAs) globally and specifically in the context of India’s economic policies. This insightful book delves into the intricacies of India’s foray into FTAs and examines the underlying factors behind the much-debated question – have the FTAs delivered? Dr Seshadri has attempted to present a balanced view of their impact on the country’s economy, the hits and misses in the FTA negotiations, all with a ringside view of the complex world of FTA negotiations.
Published by Oxford University Press, the book begins with a discerning overview of the historical origins of FTAs worldwide. Thereafter, Seshadri delves into the post-World War II era economics, which witnessed a surge in regional and bilateral trade agreements as countries sought to enhance their economic ties and foster regional integration. He carefully navigates the growth of FTAs over the decades, providing the readers with a reality check on the process and nuances involved, and highlighting the significance of these partnerships in today’s overall global economic landscape.
The author initiates the India narrative by tracing its first FTA with Sri Lanka in 2000, a significant milestone in India’s trade relations with neighbouring countries. He elucidates how this marked the inception of India’s engagement with FTAs and highlights the country’s subsequent journey of entering into such agreements with other nations, echoing the ‘Look East Policy’ that aimed to enhance India’s economic integration with Southeast Asia and East Asia. In this context he has termed the period of 2000-2011 as one of active FTA engagement.
Low utilisation rates
One of the central issues addressed in the book is the low utilisation rates of Indian FTAs. Despite having entered into several agreements with different countries, India has struggled to make full use of the preferential trade benefits they offer. Seshadri carefully dissects the reasons behind this underutilisation, such as non-tariff barriers, complex rules of origin, and challenges in understanding and complying with the agreements’ provisions. By doing so, he provides readers with valuable insights into the hurdles that hinder the effective implementation of FTAs and calls for strategic reforms to address these issues including improving our manufacturing competitiveness to take advantage of the inbound tariff concessions.
The book delves into the ongoing debate on whether FTAs are building blocks that stimulate economic growth or stumbling blocks that impede domestic industries. Seshadri presents a balanced analysis, considering both perspectives. He highlights the potential benefits of FTAs in terms of market access and discusses their impact on competitiveness of Indian businesses in the global arena. However, he also acknowledges the concerns raised by critics, particularly regarding the vulnerability of certain industries to foreign competition. Through this nuanced exploration, the author encourages readers to appreciate the complexities and trade-offs involved in FTA negotiations.
Seshadri doesn’t shy away from tackling technical aspects involved in FTAs, such as market access, Sanitary and Phytosanitary (SPS) measures, Technical Barriers to Trade (TBT), and Rules of Origin (ROO). At times the book borders on being a highly technical treatise, which no doubt would be a treat for a trade scholar but may find the not so cognisant grappling to fathom the nuances. The book sheds light on the challenges faced by negotiators and policymakers in navigating these issues, emphasising the need for well-structured agreements that take into account the unique needs of each partner country.
Having myself anchored the India-Korea and India Japan CEPAs for close to seven years in the Department of Commerce, I find his impact assessment of the three significant Indian FTAs: those with South Korea, Japan, and Singapore, well-founded. By examining the economic effects of these agreements, the author presents intriguing insights into the opportunities and challenges that arose from their implementation. The inclusion of data and case studies lends credibility to the assessment and enables readers to gain a deeper understanding of the complexities surrounding FTAs.
Going beyond just exploring bilateral agreements, Seshadri broadens the scope to discuss the mega pluri-lateral agreements which have been in the spotlight in the last few years such as the Trans-Pacific Partnership (TPP) and the Regional Comprehensive Economic Partnership (RCEP). In this exploration, he masterfully navigates the nuanced aspects of these agreements and highlights their potential implications on global supply chains.
On the way forward for India, Seshadri lays stress on analysing some of the lessons learnt from past FTAs to build a foundation for pursuing negotiations of future FTAs. He also stresses on the need for improving domestic competitiveness to complement FTA strategies. However, one aspect which perhaps could have added to the richness of the book would be in a deeper examination of the role of public opinion and stakeholder engagement in shaping India’s FTA negotiations and how to navigate these intricacies. In his concluding sections Seshadri also hints at a shift in India’s geopolitical focus from Act East to the Indo Pacific and hints that our FTA priorities could align with this shift.
In conclusion, tis book stands out as a comprehensive and thought-provoking study of India’s engagement with FTAs. VS Seshadri’s expertise in the subject matter shines through as he deftly analyses the evolution of Indian FTAs and the complexities surrounding them. His meticulous research and nuanced analysis, coupled with the impact assessments and real-world examples, add depth to the narrative, making the book an essential read for policymakers, economists, and anyone interested in international trade dynamics.
(The author is a former government servant who spent the last seven years of his service in the Department of Commerce)