Transparency in FTA

Transparency in FTA

Quest for transparency in FTA negotiations

#GS-03 Economy, #GS-02 International Relations

For Prelims:

Free Trade Agreement:

  • A Free Trade Agreement (FTA) is an arrangement or a treaty between two or more countries to remove trade barriers and facilitate trade between them.
The list of FTAs signed by India
Sl No Name of the Agreement
1. India-Sri Lanka Free Trade Agreement (FTA)
2. Agreement on South Asian Free Trade Area (SAFTA)


(India, Pakistan, Nepal, Sri Lanka, Bangladesh, Bhutan, the Maldives and Afghanistan)

3. India-Nepal Treaty of Trade
4. India-Bhutan Agreement on Trade, Commerce and Transit
5. India-Thailand FTA – Early Harvest Scheme (EHS)
6. India-Singapore Comprehensive Economic Cooperation Agreement (CECA)
7. India-ASEAN CECA – Trade in Goods, Services and Investment Agreement (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam)
8. India-South Korea Comprehensive Economic Partnership Agreement (CEPA)
9. India-Japan CEPA
10. India-Malaysia CECA
11. India-Mauritius Comprehensive Economic Cooperation and Partnership Agreement (CECPA)
12. India-UAE CEPA (*)
13. India-Australia Economic Cooperation and Trade Agreement (ECTA) (*)

(*) Signed, but yet to be implemented.

For Mains:

Need for Transparency in FTAs:

  • In India, there is no mechanism for any role of Parliament in the ratification of free trade agreements.
  • An FTA has a far-reaching impact on the economy and society.
  • Given this, one legitimately expects transparency and greater scrutiny of the FTA process both during and after the negotiations.
  • In the U.K., for example, there are several robust mechanisms that foster a certain degree of transparency in the FTA negotiations.

Lessons from UK:

  • First, the Department of International Trade (DFIT), U.K., publishes a policy paper laying down the strategic objectives behind negotiating an FTA and why it is important for the U.K. to have an FTA with a particular country.
  • This policy paper is fairly detailed listing the specific advantages of signing an FTA such as the economic gains expected, distributional impacts, the environmental impact, and the labour and human rights dimensions of the FTA.
  • Second, the policy paper that the DFIT publishes also contains the inputs and responses received by various stakeholders such as businesses, non-governmental organisations, and others.
  • Furthermore, the policy paper also explains the government view on specific suggestions.
  • Third, in the U.K., the strategic objectives identified by the government for signing an FTA are scrutinised by the U.K. Parliament.
  • This job is performed by the International Agreements Committee (IAC) of the British Parliament.
  • The IAC hears expert witnesses on the FTA, critically examines the government’s strategic objectives for each FTA under negotiation, and offers key recommendations wherever it finds gaps in the government’s approach.
  • The U.K. government then responds to these recommendations.
  • Fourth, in the U.K, under the 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.
  • This allows Parliament to be apprised of the treaty the executive is going to ratify.

What India can do:

  • India should develop a law on entering treaties including FTAs including the following provisions.
  • First, the executive should make a clear economic case outlining its strategic objectives publicly for entering into negotiations for a treaty such as an FTA.
  • Second, the executive should be under an obligation to consult all stakeholders, respond to their concerns and make this information publicly available.
  • Third, the Indian Parliament should constitute a committee on the lines of the U.K.’s IAC that will scrutinise the strategic objectives behind entering into an FTA.
  • Fourth, the executive should place the FTA on the floor of Parliament for a certain duration, allowing Parliament to debate it, before ratifying it.

Source “Quest for transparency in FTA negotiations