There is no denying that policy and regulatory reforms and the effort to build a supportive infrastructure did not accompany past trade deals, limiting potential gains from FTAs.
Subrahmanyam Jaishankar, India’s minister for external affairs, recently argued that trade deals have led to deindustrialization, and while the minister did not mention specific sectors, trade associations argue that industries such as electronics and light manufacturing have suffered on account of FTAs. Critics have also linked such agreements, such as FTAs with Japan, South Korea, and ASEAN, to the decline of manufacturing in India. Even though the government’s own research has shown that India has, in sum, benefited from the trade agreements it has signed in the past, critics have pointed out that as a result of previous agreements, India has negative trade balances with several RCEP member countries.
#IMPACT OF WTO ON TRADING BLOCS FREE#
India’s refusal to accede to the agreement was not entirely surprising.Īspects of India’s experience with free trade agreements have reinforced an ideological narrative of the importance of self-reliance. In some ways, these policies harked back to a previous era when the pursuit of economic self-reliance was an integral component of India’s developmental strategy. Most recently, even before the coronavirus pandemic cratered the Indian economy, it announced a policy of economic self-reliance- atmanirbhar in Hindi-designed to boost domestic industry. And this tone has become more pronounced during the administration of Prime Minister Narendra Modi, which focused on a “Make in India” strategy early in its tenure. Even though India’s integration into the global economy increased dramatically during the last 30 years, New Delhi’s rhetoric in trade negotiations has remained mostly protectionist. It was only in the aftermath of an unprecedented financial crisis in 1991 that the country gradually moved to dismantle an array of tariff barriers. For decades, New Delhi has followed a highly protectionist set of economic policies as part of its historic commitment to a strategy of import-substituting industrialization. The potential benefits notwithstanding, India’s refusal to accede to the agreement was not entirely surprising. And staying out of the deal isolates India, limiting its ability to shape the emerging trade architecture. There were compelling political reasons for joining the RCEP as well: Being a signatory would have given India the opportunity to shape the agreement in the future. Analysts have further argued that joining the RCEP would create jobs and sustain economic growth.
Cheaper imports of goods and industrial supplies from countries such as Japan have increased India’s productive capacity. India’s experience with past free trade agreements shows that these deals have led to increases in exports to Thailand, Cambodia, Vietnam, Malaysia, and the Philippines. Besides the obvious upside to domestic consumers in the form of cheaper and higher quality products, the specific advantage of the RCEP lies in the opportunity it provides Indian firms to participate in global value chains and in attracting foreign investment. Economists and policy analysts have argued that India would in fact benefit from joining the RCEP.
Once implemented, the RCEP will either reduce or eliminate tariffs on a range of goods and services and set up rules on investment and competition, and ensure protections for intellectual property. Despite protracted negotiations, New Delhi refused to join the accord. But one Asian economic giant was missing: India. 15, 15 Asian nations representing nearly a third of the global economy signed the Regional Comprehensive Economic Partnership (RCEP), forming the world’s biggest trading bloc.
0 kommentar(er)
