New Delhi: India should move from free trade agreement (FTA)-based negotiations towards product based-trade negotiations, commerce ministry additional secretary Rajeev Kher said on Tuesday, indicating a shifting of stance in bilateral trade negotiations.
“The focus should now move on from a typical and conventional free trade or preferential trade agreement-based approach to a product-based approach,” Kher said at an event organized by the Confederation of Indian Industry lobby group.
“You identify a bilateral trading partner and you identify a particular product which has potential in that particular territory. There is a strong case for us to negotiate a non-trade regime around that product,” he added. Kher said such non-tariff barriers could be in areas such as in phytosanitary measures, technical barriers to trade or in import-licensing procedures.
However, Kher added that trade negotiations with various countries and regions should reach their logical conclusion. “But I think we should move towards identified product-based diplomacy and the non-tariff regime around it,” he added.
Kher said this has also become necessary as free-trade agreements have become too controversial. “FTAs have a price; as you know they are essentially trade-off agreements. We trade-off something to gain something. Therefore, they become controversial at times,” he added.
In a survey conducted by the Federation of Indian Chambers of Commerce and Industry (Ficci) last year, Impact of India-Asean FTA on Indian Industry, the industry body said duty reduction on imports from the Association of Southeast Asian Nations (Asean) region had hit India’s domestic market.
According to the survey, sectors where imports were found to be increasing at a substantial pace included engineering products, processed food, textiles, garments, plantation crops and auto parts. Kerala had opposed signing of the agreement holding that the state will see millions of job losses if sectors such as rubber, fishery products, tea and edible oil were opened up for trade.
Biswajit Dhar, director general at Research and Information System for Developing Countries, said that the commerce ministry has perhaps realized India is paying a heavy price by signing so many free trade agreements and now it should be selective in its approach.
However, Dhar said it will not be possible for India to negotiate only the tariff or non-tariff regime of a product with another trading partner.
“This will be against the most-favoured nation status granted to all countries under World Trade Organisation (WTO) regulations. WTO will only allow free trade agreements that substantially cover all trade among trading partners. But two countries cannot liberalize tariff or non-tariff regime for a particular product,” he said.
Speaking at the same event, junior commerce minister Jyotiraditya Scindia said India has so far singed 10 FTAs and five preferential trade agreements (PTAs) and is negotiating 16 PTAs and seven FTAs. “When completed, such agreements would cover over a hundred countries spread across five continents,” he said.