You are here:
Media >Exporters yet to realise
potential of bilateral trade agreements
Exporters yet to realise potential of bilateral trade agreements
Business Standard, January 05, 2012
not encompassing, depend on sector; experts blame lack of awareness
and complex procedural issues for lacklustre performance.
stepped up its approach in clinching bilateral trade and investment
pacts over the last five years to obtain market access. But this has
not really boosted merchandise exports to the partner countries, as
exporters possess inadequate knowledge of the benefits of such
analysts and experts blame lack of awareness and complex procedural
issues for the lacklustre performance. Ten years after India started
implementing its Plan B, bilateral trade agreements, to beat the
impasse at the World Trade Organisation’s Doha Round of
liberalisation talks, the country seems to be rolling as far as
inking these pacts are concerned, after a slow start.
approach to trade talks has also evolved since its first negotiation
on an early harvest scheme with Thailand in 2004. For instance, the
cloud of secrecy has given way to a consultative process, where
industry associations and trade bodies are consulted and their
concerns are taken on board.
data assessment is a problem, as the government does not keep a
record of trade taking place through the bilateral vis-à-vis the
to a study by Jaipur-based think tank CUTS International, based on
the commerce and industry ministry’s data, India’s trade with its
trading partners through the bilateral agreement route stood at
$163.74 billion in 2010-11, 27.46 per cent of the country’s total
trade of $596.20 billion.Experts view these trade deals as having
widespread geopolitical significance rather than just being
mechanisms to boost trade.
(free trade agreements), PTAs (preferential trade agreements), CECAs
(comprehensive economic cooperation agreements) are still not
considered to be completely an economic instrument, as these are
largely governed by geo-economic considerations, with a substantial
geo-strategic pursuit. Recent engagements with Korea and Japan
clearly reflect such orientations, which have much to do with the
changing geopolitical equations in East Asia,” said Faisal Ahmed,
associate director, CUTS International.
nine such bilateral trading arrangements with Singapore, Japan,
South Korea, Malaysia, Asean (Association of Southeast Asian Nations
- Thailand, Singapore, Malaysia, Vietnam, Indonesia, Laos, Cambodia,
Philippines, Brunei and Myanmar), Sri Lanka, Chile, Afghanistan and
Mercosur (the Latin American trade bloc — Argentina, Brazil, Uruguay
and Paraguay). Besides, India also has separate two-way trade
arrangements with the Asia-Pacific bloc, South Asia, Nepal, Finland,
Bhutan and Thailand.
last three years, it has signed broad-based bilateral trade deals
with South Korea, Japan, Malaysia and the 10-member Asean. These
deals cover trade in goods, services and investment. Currently, it
is in the process of negotiating 13 such trade pacts, significant
among these being with the European Union, the South African Customs
Union (SACU) and Asean for services and investment, among others.
reality is exporters consider all these agreements to be yet another
documentation in the entire scheme of things. Barring the big
companies, most Indian businessmen do not consider these deals to be
an instrument to improve market access. The awareness among
exporters is poor,” said Rajiv Raizada of the Export Inspection
Council under the commerce and industry ministry.
generally negotiated based on the feedback of industry chambers and
associations, which forms the main basis of the negotiating text for
the government. Though the commerce ministry negotiates such deals,
inputs and suggestions are sought from other ministries and
offering a range of flexibilities and freebies, these deals had not
been successful due to problems in dissemination of information such
as product coverage, preferential margins and rules of origin, said
example, India signed a PTA with Chile in September 2007, when
two-way trade stood at $2.3 billion. Instead of growing, trade with
Chile declined to $2.10 billion in 2010-11.
parlance, rules of origin are referred to the criteria needed to
determine the source of a product. Their importance is derived from
the fact that duties and restrictions in several cases depend upon
the source of imports.
not very sure about how much of the preferences are being utilised
by exporters, as the data on preference utilisation is not
available. Sometimes exporters don’t avail of preferential treatment
because there are too many RTAs (regional trade agreements) and it’s
difficult for them to assess the best option,” said Nisha Taneja,
professor, Indian Council for Research on International Economic
highlighted the fact that separate bilateral agreements within a
bigger trade deal made external trade more cumbersome. A case in
point is India’s FTA in goods with Asean, which became operational
from January 2010. Despite that, India is negotiating separately
with some Asean members such as Thailand and Indonesia.
protect the interests of the domestic industry, these agreements
provide a sensitive or negative list of items on which limited or no
tariff concessions are granted. Benefits from these trade and
investment agreements sometimes depend from sector to sector.
to Premal Udani, chairman of the Apparel Export Promotion Council,
the apparel industry has gained a lot from the deal with Japan, as
it is the world’s third-largest market for apparel, after the EU and
the US. But the industry would not gain at all from the deal with
Korea, since garments have not become duty free there.
Individual trade agreements are also helping India in enhancing
export in sectors in which it has comparative advantages. Such deals
had also helped India in integrating with the global economy, added
At a time
when exports are feeling pressure from slowdown in some of India’s
traditional markets, like the US and Europe, bilateral trade deals
can be utilised effectively to boost the country’s merchandise
exports and help India achieve its target of $500 billion in exports
news item can also be viewed at: