Rethink on bilateral trade pacts

The government has decided to go slow on preferential and free trade agreements (FTAs) following concerns raised by domestic industry that there will be a flood of third party imports in the absence of clear policy guidelines on rules of origin. The Centre also fears revenue losses on account of the withdrawal of import tariffs.

"Some concerns have been expressed. We are looking into them," Commerce and Industry Minister Kamal Nath told Business Standard.

Over the last one year, India has committed to a host of FTAs and PTAs with Thailand, the Association of Southeast Asian Nations (Asean), Bimstec, Mercosur and Singapore, where the Comprehensive Economic Co-operation Agreement will cover trade in goods and services.

While Bimstec includes Bhutan, Myanmar, Nepal, Sri Lanka and Thailand, Mercosur comprises Brazil, Argentina, Uruguay and Paraguay. In addition, the government has received similar requests from Israel and is also considering FTAs with Brazil and South Africa.

The commerce ministry has received several complaints from domestic industry regarding rules of origin, which signify the norms governing granting of originating status to products. It has already appointed a committee to look into the attendant issues.

Moreover, the FTAs have created difficulties for the Customs machinery and the commerce department with regard to the standardisation of guidelines and tariff anomalies have crept into the system, according to sources.

Besides these FTAs, India is also preparing an alternative strategy for a multilateral trade regime under the World Trade Organisation.

Globally, leading trading economies like the US, Japan and Mexico have signed bilateral trade agreements to increase their exports and India is also charting a similar roadmap.