T S Vishwanath: Renewed hopes in 2013

Last Updated: Wed, Jan 02, 2013 20:51 hrs

The next 12 months can become an action-packed calendar for India in the area of trade agreements if the various comprehensive trade deals, which are at an advanced state of negotiations, are concluded, and the Ministerial Meeting of the World Trade Organisation (WTO) delivers some meaningful results.

The calendar for concluding comprehensive free trade agreements (FTAs) can be substantial if bilateral deals with important trade partners, including the European Union, Australia, New Zealand and Canada, move towards a conclusion. The deal with the European Union, for instance, has been in the works for several years now, and in all probability will reach a conclusion this year.

If general elections in the country stay on course, and are held in 2014, negotiators will have at least the first seven or eight months of 2013 to conclude a deal with important trade partners. What will, however, be important is to ensure that any deal, which would have taken several years to conclude, should provide some real market access for industry.

This is important because the earlier two deals with Japan and South Korea – though substantial – failed to deliver the expected results from an industry perspective. One did not see the kind of enthusiasm from industry about the deals, expected with markets as large as South Korea and Japan. The government understood the need for greater dissemination of information regarding these agreements, and it undertook a familiarisation drive in 2012 to help the industry capitalise on benefits now available with both these countries.

The agreement with the Association of Southeast Asian Nations (Asean) provides a new opportunity in 2013. The services agreement has been finalised, and companies in the service sector will soon be able to take advantage of a growing market, despite the gloom across the globe. The Asean will remain a significant destination for Indian services export in the coming years and, therefore, Indian industry, especially the information technology sector, will need to take steps to identify emerging trends and capitalise on benefits that the agreement will provide.

An important issue that the government may like to focus on with the countries where FTAs are already in place is the signing of mutual recognition agreements (MRAs) on food and industrial products. Without MRAs, companies on both sides will find it difficult to achieve real market access, since technical barriers can act as non-tariff barriers to exports.

Agreements with Australia and New Zealand will be vital because not only will they provide some market access, but also they will tie in well with the fact that value chains can now be developed by Indian companies across the Asia-Pacific region. Industry associations will do well in the coming year if they start positioning FTAs as opportunities for building value chains by Indian companies, which have embarked on a globalisation drive.

Significantly, it is not just large companies like the Tatas or the Aditya Birla Group that have globalised operations, but several medium-sized firms in India are now looking to source raw materials and intermediates from other markets to build competitiveness. That can help the government and industry associations to position FTAs as important platforms for creating such value chains.

Another important FTA for India will be with Canada, which is under negotiations. It will provide the industry an opportunity to engage better with the North American continent, which is an important market for nearly all sectors with a global presence. It can also trigger discussions on a possible start of negotiations with the US — the topic of discussion in academic circles in both India and the US.

The Doha Round of negotiations, which has a Ministerial Meeting at Bali in November, also provides India with the opportunity to take leadership in some important aspects of the on-going negotiations to deliver a confidence-building agreement for WTO.

With exports dwindling owing to a global slowdown, the government and the industry in India can help sectors in manufacturing and services sectors to tap new markets and build stronger presence in other countries through mutually beneficial agreements this year.

The writer is Principal Adviser at APJ-SLG Law Offices

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