India needs to sign more FTAs to counter mega trade pacts EU, US are planning

India is negotiating seven free trade agreements (FTAs) with countries such as Russia, Australia and Peru that could help it deal with possible loss of share in traditional markets such as the US and the EU that are negotiating mega regional trade pacts.

“We need to look at FTAs with countries in South-East Asia, Latin America, CIS and Africa that will provide us with export destinations to compensate for erosion of preferences in traditional markets,” Additional Secretary in Commerce Ministry JS Deepak said at a seminar on changing global economic scenario organised by industry body FICCI.

Two proposed mega regional trading agreements – a Trans-Atlantic Partnership between the EU and the US (TTIP) and a Trans-Pacific Partnership between countries such as the US, Canada, Japan, Malaysia, Australia, Mexico and Vietnam (TPP) – are expected to pose stiff challenges for India which is not part of the two pacts.

“Transatlantic partnerships will throw challenges to countries like India and China. We need to make Indian products more competitive and develop more FTAs,” Commerce Secretary Rajeev Kher pointed out.

A successful FTA with the 10-member ASEAN and its six free trade partners under the proposed Regional Comprehensive Economic Partnership (RCEP), could help India be part of the global value chain.

“As part of RCEP, India could be part of the global value chain at the lower end to begin with that would give a boost to employment generating manufacturing and exports,” Deepak said. Although RCEP is not as ambitious as the TPP or the TTIP, it accounts for 50 per cent of the world’s population, 30 per cent of world trade and 30 per cent of world’s GDP, he added.

WTO concerns

Kher expressed concern over slow progress in finalising the agenda for the Nairobi ministerial meeting of WTO members in December, which is to include a number of important issues such as food security which is of primary concern to India.

“What is happening essentially (at the WTO) is a debate on the agenda for the ministerial meeting. The deadline of July is approaching fast, but we seem to be going nowhere. This is a clear indication that in the multilateral fora, we will continue to show that we are busy without producing much,” Kher said.