- Recently, the new (Joe Biden) US administration has indicated that it is no longer interested in securing a bilateral Free Trade Agreement (FTA) with India. The US is India’s largest trading partner, and one with whom it has a significant trade surplus.
- This calling off of the US-India mini-trade deal provides an opportunity for India to holistically review its stance on global trade.
- It is a pact between two or more nations to reduce barriers to imports and exports among them. Under a free trade policy, goods and services can be bought and sold across international borders with little or no government tariffs, quotas, subsidies, or prohibitions to inhibit their exchange.
- The concept of free trade is the opposite of trade protectionism or economic isolationism.
- After India opted out of the Regional Comprehensive Economic Partnership (RCEP) in November 2019, the 15-member FTA grouping that includes Japan, China and Australia, FTAs went into cold storage for India.
- But in May 2021 came the announcement that India-EU talks, which had stalled in 2013, would be resumed. This was followed by the news that FTAs with other countries like the UAE, Australia and Britain, too, are in various stages of discussion.
US-India Mini-Trade Deal
- Resumption of export benefits to certain domestic products under the Generalised System of Preferences (GSP).
- Greater market access for its products from sectors like agriculture, automobile, auto components and engineering.
- Greater market access for its farm and manufacturing products, dairy items and medical devices.
- The office of the US Trade Representative (USTR) has underlined India’s measures to restrict companies from sending personal data of its citizens outside the country as a “key” barrier to digital trade.
- USTR report also highlights that India’s move to impose data equalisation levy on foreign e-commerce firms discriminates against American companies.
- The US has also raised concerns over the high trade deficit with India.
- Given that India is not party to any mega-trade deals, this would be an important part of a positive trade policy agenda.
- Having walked out of RCEP, India needs to demonstrate to its potential FTA partners, including the EU and the UK, that it is a viable alternative to China in a post-Covid world.
SOURCE: THE HINDU,THE ECONOMIC TIMES,MINT