By Kirtika Suneja, ET Bureau | Feb 26, 2016
NEW DELHI: The Economic Survey has called for a review of India’s free trade agreements (FTAs), saying they have led to more imports than exports.
Citing the proliferation of mega-regional trade pacts as another reason for a review, it suggested they include services also for a “definitive assessment”.
“Increased trade has been more on the import than export side, because India maintains relatively high tariffs and, hence, had larger tariff reductions than its FTA partners,” the Survey said. It said that most studies on Indian FTAs are based on a ‘before-after analysis’, which fail to isolate the effect of the policy change from trends that would have happened even without the change.
The Survey pointed that India is among the countries that have the severest trade restrictions in goods and services.
In the current context of slowing demand and excess capacity with threats of circumvention of trade rules, the progress on FTAs must be combined with strengthening India’s ability to respond with WTO-consistent measures such as anti-dumping, duties and safeguard measures, it said.
The Survey also suggested more introspection on support to farmers, mitigating the impact of erratic trade policy, reconciling the ‘big but poor’ dilemma that confronts India in trade negotiations, tackling external environment-led stress and broader trade engagement.
Referring to the “non-success of the Nairobi WTO negotiations”, it questioned the extent to which India needs special safeguard mechanism and the need to press for permanent solution on food security.
It suggested that India’s WTO obligations should shift away from border protection to domestic support, besides opening up markets and undertaking greater commitments in the context of future WTO negotiations.