Jaishankar hopes FTA talks will find a ‘landing point
Context
As India and the United Kingdom continue to negotiate a trade agreement, which was expected to be completed by Deepavali 2022, External Affairs Minister (EAM) S. Jaishankar expressed hope that the two nations will be able to reach a mutually beneficial “landing point” for the accord.
What is FTA?
- FTAs are international agreements that aim to create a free trade zone between collaborating countries.
- There are two kinds: bilateral (between two countries) and multilateral (including three or more countries, which is more difficult to negotiate).
What is the purpose and goal of the FTA?
- Goal: Establish tariffs and charges on imports and exports to decrease or eliminate trade obstacles and promote international trade.
- Chapters on preferential tariff treatment, trade facilitation, and rules in areas such as investment, intellectual property, government procurement, technical standards, and sanitary and phytosanitary issues are typically included.
What are the features of FTA?
- Tariff Elimination or Reduction: The removal or reduction of tariffs and charges on goods exchanged among members.Reduces the cost of trade by making goods more affordable and competitive.
- Market Entry: Objective: Improves member countries’ access to each other’s markets. Expands market potential for goods and services, which stimulates economic growth.
- Rules of Origin: Specifies the standards for determining the origin of items traded under the agreement. Ensures that only goods from member countries benefit from preferential treatment, excluding third-party items.
- Reduction of Non-Tariff Barriers: Addresses non-tariff barriers such as quotas, licensing restrictions, and technical standards.Increases trade efficiency by removing barriers other than tariffs.
- Services Trade: Extends deregulation to the service sector, encouraging cross-border service offerings. Encourages service industry growth and develops a holistic economic partnership.
How is it going to be beneficial for India to sign the FTA with England?
- Increased Market Access: An FTA would boost Indian enterprises’ access to the U.K. market and vice versa, allowing for greater export growth.
- Diversification of trade: Diversifying trade partners decreases reliance on individual markets, which improves resilience in the face of global economic changes.
- Tariff reduction: Tariff elimination or reduction on goods and services might make Indian items more competitive in the UK market, boosting exports.
- Boost to Specific Sectors: Certain sectors, such as information technology, pharmaceuticals, textiles, and services, may profit from preferential treatment, resulting in greater exports.
- Economic Growth: Economic growth can be aided by increased commerce by encouraging firm expansion, job creation, and income generation.
- Investment Opportunities: The FTA may encourage increased FDI between India and the United Kingdom by increasing corporate collaborations and technology transfer.
- Improved Business Environment: FTA clauses may eliminate non-tariff barriers, making cross-border trade and investment easier for enterprises.
