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Free trade agreement (FTA) negotiations being currently pursued by India with the UK and the EU were less challenging than ones with some Asian countries as they were the country’s “complementary partners”, Minister for External Affairs S Jaishankar has said.
While negotiating FTAs, the country has to weigh the costs carefully while also looking at opportunities. Every FTA is unique and must involve a cost-benefit analysis, he said, adding that if one is not reasonably clear of coming out ahead in terms of gains, it was not smart to go ahead with it.
“In case of RCEP (Regional Comprehensive Economic Partnership), when we looked at the import surges that were likely and the fact that it was involving a supply chain with weak rules of origin...there were risks,” the Minister said taking a dig at China by mentioning economies that were not entirely transparent in their dealings.
India exited the RCEP talks, that included the 10-member ASEAN, China, India, Japan, South Korea, Australia and New Zealand, as it realised that it could lead to cheap goods from China flowing into the country, through other member countries because of inadequate rules to check such diversions.
Referring to the FTA negotiations being currently pursued with the EU and UK, the Minister said those were ones where India did not face challenges that it had with other Asian countries. “We need to look for complementary partners…. those who would not be in the same space and offer us market growth possibilities,” he said.
India is yet to begin formal negotiations with the UK and the EU on the respective FTAs but it is likely to start within the next few years.
Reforms in right direction
On reforms, the Minister said that the government was pushing in the right direction. While some of the bolder decisions hadn’t got their full due because of the disruptions caused by the Covid-19 pandemic, the Minister said that he was optimistic that a lot of this would have an impact soon.
On the government’s recent decision to amend the taxation law to end retrospective tax, Jaishankar said that it showed that the government was ready to ``bite the bullet’’ on some very tough issues.
Highlighting the high export figures in July 2021, the Minister said that as the country comes out of the Covid-19 second wave, there was good reason to be optimistic.
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