- Prelims: Current events of international importance(FTA, tariff etc)
- Mains GS Paper II & III: Bilateral, regional and global grouping involving India and affecting India’s interests etc
- India is negotiating FTAs with countries such as the European Union, Canada, the U.K., and Israel.
- Free trade agreements (FTAs) are important to achieve the export target of $2 trillion by 2030.
INSIGHTS ON THE ISSUE
What is an FTA?
- FTA is a pact between two or more nations to reduce barriers to imports and exports among them.
- Under a free trade policy: Goods and services can be bought and sold across international borders with little or no government tariffs, quotas, subsidies, or prohibitions to inhibit their exchange.
- Protectionism: The concept of free trade is the opposite of trade protectionism or economic isolationism.
- FTAs can be categorized as:
- Preferential Trade Agreement (PTA)
- Comprehensive Economic Cooperation Agreement (CECA)
- Comprehensive Economic Partnership Agreement (CEPA)
What does FTA cover?
- Tariff reduction impacting the entire manufacturing and the agricultural sector
- Rules on services trade
- Digital issues such as data localisation
- Intellectual property rights that may have an impact on the accessibility of drugs
- Investment promotion, facilitation, and protection.
FTA negotiations in India:
- India negotiates most FTAs behind closed doors with very little information about the objectives and processes followed and negligible scrutiny.
FTA negotiations in UK:
- Department of International Trade (DFIT), U.K:
- It publishes a policy paper laying down the strategic objectives behind negotiating an FTA
- why it is important for the U.K. to have an FTA with a particular country.
- In India: No such document is produced publicly that makes a case for signing an FTA and assessing its impact on the environment and society at large.
- The policy paper that the DFIT publishes:
- It contains the inputs and responses received by various stakeholders such as businesses, non-governmental organizations, and others.
- The policy paper also explains the government view on specific suggestions
- International Agreements Committee (IAC) of the British Parliament: It identifies the strategic objectives of the government for signing an FTA along with scrutinisation.
- In India: there is no mechanism for such parliamentary scrutiny of the executive’s actions during the FTA negotiations.
- Parliamentary Standing Committee on Commerce (PSCC): It rarely scrutinizes the Indian government’s objectives behind negotiating and signing an FTA.
- UK’s Constitutional Reform and Governance Act, 2010:
- The executive has to lay down a treaty before the British Parliament for 21 sitting days with an explanatory memorandum before ratifying it.
- In India: there is no mechanism for any role of Parliament in the ratification of treaties including FTAs.
- Law for treaties: India should take precedence from UK’s laws and develop a law on entering treaties including FTAs.
- Executive should make a clear economic case outlining its strategic objectives publicly for entering into negotiations for a treaty such as an FTA.
- The executive should be under an obligation to consult all stakeholders, respond to their concerns and make this information publicly available.
- Indian Parliament should constitute a committee on the lines of the U.K.’s IAC: It will scrutinize the strategic objectives behind entering into an FTA.
- The executive should place the FTA on the floor of Parliament for a certain duration, allowing Parliament to debate it, before ratifying it.
- Accountability of executive: Executive’s constitutional prerogative of entering into an FTA or international treaties, in general, is indisputable, this power should be exercised in a manner that makes the executive answerable.
QUESTION FOR PRACTICE
- What are the key areas of reform if the WTO has to survive in the present context of ‘Trade War’, especially keeping in mind the interest of India?(UPSC 2018)
(200 WORDS, 10 MARKS)