​FTAs for a start, Pg8

Key Highlights:

• India has 20 existing Free Trade Agreements (FTAs), excluding recent pacts with the UK (July) and EFTA (October).
• Negotiations are ongoing with the United States, European Union, Canada, and the Southern African Customs Union.
• American tariffs of up to 50% on key Indian exports are pushing for faster agreement finalization.
• Trade deficits with ASEAN widened from $10 billion in 2017 to $44 billion by 2023.
• India-UAE Comprehensive Economic Partnership Agreement saw non-oil trade reach $100 billion in FY25.

Detailed Insights:

• Earlier FTAs with ASEAN, Japan, and South Korea have resulted in trade imbalances against India due to structural and policy issues.
• Inadequate negotiation of mutual recognition arrangements on quality standards, certifications, and rules of origin contributed to FTA imbalances.
• India is urged to prioritize consultations with services, seafood, engineering goods, and textiles exporters in negotiations with the U.S..
• Focus on carbon-intensive sectors like iron, steel, and cement is crucial in negotiations with the EU, considering the Carbon Border Adjustment Mechanism.
• Trade diversification requires transformation of productive sectors and integration into global value chains, beyond just signing FTAs.

Key Concepts Involved:

• Free Trade Agreement (FTA): An agreement between two or more countries to reduce or eliminate trade barriers.
• Rules of Origin: Criteria used to determine the national source of a product.
• Carbon Border Adjustment Mechanism: A carbon tariff on imports based on the carbon intensity of their production.