India’s Regional Trading Agreements
- Indian trade policy has made an important shift in the year 1991, when we have gone for globalisation, trade liberalisation and other market reforms. Thus year 1991, stands as a benchmark year for India’s trade policy.
- The next big event in World trade is setting of WTO in 1995, the successor of erstwhile GATT. WTO’s multilateral approach towards trade and as an institution of trade ombudsman is remarkable. It acts as platform between developed and developing countries to negotiate with each other.
- The successive rounds of WTO have made rules of trade game much transparent and nearly equal for all. But things have started to change after famous ‘Doha Round’ of 2001 gets staled.
- In the initial year differentiation between developed and developing countries was taken as basic principle, with larger responsibility lying on developed World. However since Uruguay round focus has shifted towards reciprocity. This has resulted in conflict between developed and developing countries over trade negotiations and subsequent staling of conferences.
- All these have lead to development of what is known as Regional groupings, RTAs and FTAs.
- Countries were signing these agreements earlier also, but they were concentrated on some part of world. These agreements give easy market access and tariff benefits to member countries.
There are many form of integration in world. Economist Jacob Viner has given his theory of ‘Custom Union’ followed by work of J.E Meade. To summarise followings are the ways of integration;
Preferential trade union; two or more countries can form a trading union and reduce tariffs on imports of each other. They maintain their individual tariffs against Rest of world.
Free trade area; two or more countries come together and abolish all tariff duties on their trade but retains individual tariffs against ROW.
Custom union; two or more countries abolish all tariff among themselves and adopts a common tariff barrier against imports of ROW.
Common market; common market is formed, when two or more countries form a custom union and in addition allows free movement of factor of production among member countries.
Economic union; it is the highest form of integration where two or more countries forms a common market and in addition proceeds to harmonise and unify their monetary, fiscal and exchange rate policies.
All of the above forms of integration have trade creation as well as trade diversion effects. To check for such diversion effects WTO has come up with most favoured nation clause, which states that,
“Any advantage, favour, privilege or immunity granted by any contacting party to any product originating in or destined for any other country shall be accorded immediately and unconditionally to the like product originating in or destined for territories of all other parties”.
India’s Regional and Free Trade Agreements
|Agreement||Member Countries||Total Members||Type of Agreement||Start Date||Coverage Area|
|Asia Pacific Trade Agreement (APTA)||Bangladesh, China, South Korea, India, Sri Lanka||5||Preferential Trading Agreement||1976||All Goods|
|India-ASEAN Trade in Goods Agreement||Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam and India||11||Free Trade Agreement||2010||All Goods|
|BIMSTEC- Bay of Bengal Initiative for Multi Sectoral Technical Economic Cooperation||Bangladesh, India, Thailand, Myanmar, Sri Lanka, Bhutan and Nepal||7||Under Negotiations||Under Negotiation|
|IBSA- India, Brazil and South Africa Agreement||India, Brazil and South Africa||3||Under Negotiations||Under Negotiation|
|SAFTA- South Asian Free Trade Agreement||India, Pakistan, Nepal, Bhutan, Bangladesh, Afghanistan and Maldives||7||Free Trade Agreement||2006||All Goods|
|India-Sri Lanka FTA||India and Sri Lanka||2||Free Trade Agreement||2001||All Goods|
|India-Malaysia Comprehensive Economic Cooperation Agreement||India and Malaysia||2||Free Trade Agreement||2011||Goods and Services|
|India-Singapore Comprehensive Economic Cooperation Agreement||India and Singapore||2||Free Trade Agreement||2005||Goods and Services|
|India-Japan Comprehensive Economic Partnership Agreement||India and Japan||2||Free Trade Agreement||2011||Goods and Services|
|India-Korea Comprehensive Economic Partnership Agreement||India and South Korea||2||Free Trade Agreement||2010||Goods and Services|
|India Chile FTA||India and Chile||2||Free Trade Agreement||2007||All Goods|
|India-Afghanistan FTA||India and Afghanistan||2||Free Trade Agreement||2003||All Goods|
|India-Bhutan FTA||India and Bhutan||2||Free Trade Agreement||2006||All Goods|
|India- Nepal FTA||India and Nepal||2||Free Trade Agreement||2009||All Goods|
|European Union and India FTA||EU member countries||Under Negotiations||Under Negotiation|
|MERCOSUR India FTA||Argentina, Brazil, Paraguay, Uruguay||5||Free Trade Agreement||2009||All Goods|
|India-ASEAN Trade in Services Agreement||Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam and India||11||Free Trade Agreement||2015||Services|
|India-Thailand FTA||India and Thailand||2||Free Trade Agreement||2004||All Goods|
Source: Ministry of Commerce and WTO
Doctoral Scholar in Economics & Senior Research Fellow, CDS, Jawaharlal Nehru University