“Trade outcomes have been stagnating. The trading environment is becoming more challenging as the buoyancy of Indian exports has declined with respect to world growth and as the negotiation of mega-regional trading arrangements threatens to exclude India,” the Survey, tabled in Parliament on Friday, said.
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For the first time, the Economic Survey underlined the imminent dangers of India not being party to the mega trade agreements — Trans-Pacific Partnership (TPP) and Trans-Atlantic Trade and Investment Partnership (TTIP).
“In the context of the slowdown in both world growth and India’s export buoyancy, any possible exclusion from the mega-regionals would be additionally worrisome,” the Survey stated.
The TTIP is a free trade agreement being discussed between the US and the European Union and is in final stages of negotiations. On the other hand, TPP is negotiated among the US, Canada, Japan, Australia, Singapore, Vietnam, Brunei, Malaysia, Mexico, Chile, New Zealand and Peru.
Beside tariff liberalisation, both these agreements are expected to usher in higher level of standards with stricter intellectual property provisions in global trade, much beyond the benchmark set by the World Trade Organization.
“There will not only be the standard diversion emanating from Indian exporters having to face higher tariffs in large, growing markets, but increasingly they will have to contend with different and higher product and sustainable development standards, placing them at an even greater disadvantage,” it said.
Although India is party to yet another ambitious proposed trade pact such as the Regional Comprehensive Economic Partnership, it might prove to be too beneficial for the exporters because the overall standards in this agreement will be much weaker compared to TPP and TTIP.
The Economic Survey has also hinted towards a possibility of India joining the TPP in the future if the country has to integrate with global value chains by way of greater tariff liberalisation under the current free trade agreements (FTA).
As a result, the Survey suggested “significant upgrading of Indian trade capability” if ever the country wants to participate in the mega trade pacts. This is because these large and diverse trade pacts will not only seek drastic tariff liberalisation and setting of higher standard, it will also have provisions that will be much ahead of the reforms India is undertaking at present.
UPGRADING TRADE CAPABILITY
- Trans-Atlantic Trade and Investment Partnership is a free trade pact being discussed between the US and the European Union and is in final stages of negotiations
- Trans-Pacific Partnership is negotiated among the US, Canada, Japan, Australia, Singapore, Vietnam, Brunei, Malaysia, Mexico, Chile, New Zealand and Peru
- Besides tariff liberalisation, both these agreements are expected to usher in higher level of standards with stricter intellectual property provisions in global trade