Expanding the Bandwidth: The Commerce Ministry’s Efforts to Bolster Free Trade Pacts 2023

Expanding the Bandwidth: The Commerce Ministry’s Efforts to Bolster Free Trade Pacts 2023

Trade discussions with partner nations are an active and ongoing activity to improve market access for India’s exports and other economic prospects.

A senior official said that the commerce ministry is looking at methods to enhance its bandwidth for carrying out these time- and resource-intensive negotiations as more nations approach India to negotiate bilateral free trade agreements (FTAs) to strengthen economic relations.

Officials from the commerce ministry are now negotiating several free trade agreements (FTAs) with nations, including the UK, Canada, and the European Union.

“Negotiations take a lot of time, effort, and resources, including human resources. As a result, the government official added, “We are attempting to boost the bandwidth inside the commerce department.

It is anticipated that Indian trade service personnel would participate more in free trade agreement discussions.

Peru and other Latin American nations are also interested in establishing a free trade agreement (FTA) with India, and India is also carefully considering this, the official added.

The MERCOSUR trade organization in South America is similarly eager to convert current preferential trade deals to an FTA. A commercial agreement between India and the GCC (Gulf Cooperation Council) group is also being discussed.

India has also shown a desire to engage in these discussions with Africa on a bilateral or individual basis.

Brazil, Argentina, Uruguay, Paraguay, and Bolivia make up MERCOSUR, and Chile and Bolivia are associate members. It was established in 1991 to promote unrestricted trade in commodities, capital, services, and people within the area.

In trade agreements, the maximum amount of items that may be exchanged between two nations is subject to significantly reduced or eliminated customs charges. Additionally, they loosen regulations to encourage the trade of services and boost investment.

A trade expert claims that the Department of Commerce is the team leader in an FTA. The Departments of Revenue, chemicals, pharmaceuticals, fertilizer, textiles, heavy industries, and the Department for the Promotion of Industry and internal trade (DPIIT) are among the significant ministries participating in these discussions.

Officers from several ministries with expertise in the new topics included in these agreements, such as e-commerce, labour, the environment, gender, and sustainability, are crucial participants in the discussions.

Private specialists, attorneys, and institutions like the Centre for WTO Studies participate in these discussions.

A proposal to establish a Global Trade Promotion Organisation (GTPO) is part of the plans of the Ministry of Commerce to reform the department.

The Department of Commerce should implement GTPO, according to a study. Future export promotion programmes in the nation can be expected to rely heavily on the GTPO. It was said that trade service officials would staff the prospective entity in critical roles.

According to a different expert, the government representatives taking part in these conversations should carefully consider the opinions of all the parties before acting.

“To negotiate these FTAs, a strategy and plan must be defined. The fundamental problem, according to the expert who wished to remain unnamed, should be that the negotiating technique stays the same if the officer in charge is transferred to another department.

Trade discussions with partner nations are an active and ongoing activity to improve market access for India’s exports and other economic prospects.

To provide better market access for local goods and encourage exports, India has so far negotiated six preferential trade agreements and 13 free trade agreements with nations including Japan, Korea, and the UAE. Recently, the government inked three similar contracts with Australia, the UAE, and Mauritius.

Trade in products and services, rules of origin, technical trade barriers, sanitary and phytosanitary regulations, customs procedures and trade facilitation, trade remedies, legal and institutional concerns, and professional migration are the main topics debated in all FTAs. Gaining more market access is the central topic of discussion in these chapters.

Sustainability (environment, labour), Geographical Indications (GIs), Intellectual Property Rights (IPRs), digital trade or e-commerce, competition, gender, SMEs, anti-corruption, transparency, innovation, marketing and development cooperation, and good regulatory practises are additional topics covered in trade agreements. FTA partners concentrate on harmonizing domestic laws in several areas.

All FTAs have core themes for negotiation. Additional topics are selected, agreed upon, and discussed. Most of the extra issues are covered via trade agreements between the EU and the UK.

Ajay Srivastava, the co-founder of the Global Trade Research Initiative (GTRI), stated that India must determine how much its exports will rise following a free trade agreement before “saying yes” to new discussions.

Real Additional Market Access (RAMA) is the critical concept. RAMA is the export value of Indian goods when non-zero MFN (most preferred nation) duties in partner nations become zero post-FTA, causing the product to be less expensive than the price paid by the product’s closest rival, the official added.

According to Srivastava, Rama provides a rational understanding of the possibility of a rise in exports following the FTA. We shouldn’t be shocked by India’s subpar export performance with FTA partners. It occurred due to India’s high tariffs and the FTA partners’ much-reduced tariffs. He claimed that even before the agreements were signed, we could have predicted the outcomes.

Free trade agreements (FTAs) are instrumental in shaping international commerce in an era of globalization and economic integration. They allow nations to develop competitive advantages, streamline regulatory hurdles, and foster economic growth. Recognizing this pivotal role, India’s Commerce Ministry is taking tangible steps to amplify its negotiation capacities for these pacts.

In the past, India has faced criticism for being slow and bureaucratic in negotiating trade agreements. However, the current administration has taken this criticism and is making concerted efforts to bring about much-needed reforms. Recognizing the role of FTAs in stimulating economic growth and creating jobs, the Ministry is working towards increasing its bandwidth to negotiate these agreements.

The main aim of this initiative is to create a more robust and well-structured approach to trade negotiations, making them more efficient and beneficial for the country. The Commerce Ministry is keen to implement a framework that ensures faster negotiations while prioritizing India’s economic interests.

The first step towards increasing the Ministry’s bandwidth for negotiating FTAs is building institutional capacity. The Ministry invests in training programs to equip its team with the skills to negotiate trade agreements effectively. This includes honing skills in diplomacy, understanding international trade law, and navigating complex economic data. The Ministry is also focusing on hiring professionals with relevant experience and expertise.

In addition, the Ministry is investing in technology to facilitate better data management, analytics, and information flow. This will improve its ability to analyze the impact of different trade scenarios and make data-driven decisions. By leveraging technology, the Ministry hopes to bring more precision and efficiency to its negotiation process.

Another critical initiative involves the greater involvement of various stakeholders in the negotiation process. This includes businesses, industry bodies, trade unions, and other government departments. The Ministry believes that this will lead to more comprehensive and beneficial agreements.

Regular consultation with these stakeholders will ensure their interests are considered, and the FTAs are balanced and fair. This bottom-up approach will also help to mitigate any potential negative impacts of the agreements on local industries and employment.

The Commerce Ministry is also developing a more proactive approach to FTAs. It is working to identify potential trade partners and initiate discussions. This is a shift from the previous reactive approach, where India often responded to proposals rather than creating them.

Moreover, the Ministry focuses on diversifying its trade partners, especially looking towards emerging markets in Africa and Latin America. This aligns with India’s broader strategy of reducing its dependence on traditional markets and expanding its global footprint.

As the world continues to evolve into an interconnected global village, the role of FTAs in shaping economic outcomes becomes increasingly significant. The Indian Commerce Ministry’s recent moves to increase its bandwidth for negotiating these agreements demonstrate a renewed commitment to proactive international engagement.

It also indicates a recognition of the need for better-equipped and more efficient institutions to navigate the complex world of international trade. These initiatives could significantly enhance India’s position in global business, leading to more significant economic growth and prosperity.