NEWS HIGHLIGHTS
Theme : International Relations
Paper : GS - 2
To achieve the export target of $2 trillion by 2030, India is going the whole hog on free trade agreements (FTAs). India is negotiating FTAs with countries such as the European Union, Canada, the U.K., and Israel.
TABLE OF CONTENT
- Context
- Significance of FTA
- Issues with Indian FTA Negotiations
- Framework of FTA in UK
- Recommendations to Improve India’s FTA
Context : To achieve the export target of $2 trillion by 2030, India is going the whole hog on free trade agreements (FTAs). India is negotiating FTAs with countries such as the European Union, Canada, the U.K., and Israel.
Significance of FTA :
- FTA include multiple trade aspects: FTAs cover a wide array of topics such as tariff reduction impacting the entire manufacturing and the agricultural sector; rules on services trade; digital issues such as data localization; intellectual property rights that may have an impact on the accessibility of drugs; and investment promotion, facilitation, and protection.
- Great impact on economy and society: Consequently, an FTA has a far-reaching impact on the economy and society. Given this, one legitimately expects transparency and greater scrutiny of the FTA process both during and after the negotiations.
Issues with Indian FTA Negotiations :
- Lack of transparency in negotiations: India negotiates most FTAs behind closed doors with very little information about the objectives and processes followed and negligible scrutiny.
- No robust framework for FTA negotiations: This is not the case in other countries with whom India is negotiating such an FTA. In the U.K., for example, there are several robust mechanisms that foster a certain degree of transparency in the FTA negotiations. Furthermore, there are institutional apparatuses that enable the scrutiny of the actions of the executive, during and after the signing of the FTA.
Framework of FTA in UK :
- Detailed information on FTA’s: Department of International Trade (DFIT), U.K., publishes a policy paper laying down the strategic objectives behind negotiating an FTA and why it is important for the U.K. to have an FTA with a particular country. This policy paper is fairly detailed listing the specific advantages of signing an FTA such as the economic gains expected, distributional impacts, the environmental impact, and the labor and human rights dimensions of the FTA.
- Inputs from stakeholders: The policy paper that the DFIT publishes also contains the inputs and responses received by various stakeholders such as businesses, non-governmental organizations, and others. Furthermore, the policy paper also explains the government view on specific suggestions
- FTA scrutiny by parliament: In the U.K., the strategic objectives identified by the government for signing an FTA are scrutinized by the U.K. Parliament. This job is performed by the International Agreements Committee (IAC) of the British Parliament. The IAC hears expert witnesses on the FTA, critically examines the government’s strategic objectives for each FTA under negotiation, and offers key recommendations wherever it finds gaps in the government’s approach. The U.K. government then responds to these recommendations.
- Parliament has to ratify the FTA: In the U.K, under the Constitutional Reform and Governance Act, 2010, the executive has to lay down a treaty before the British Parliament for 21 sitting days with an explanatory memorandum before ratifying it. This allows Parliament to be apprised of the treaty the executive is going to ratify.
Recommendations to Improve India’s FTA :
- Publicize the objectives of FTA: India should take a leaf out of the U.K. book and develop a law on entering treaties including FTAs. This law should have the following parts. The executive should make a clear economic case outlining its strategic objectives publicly for entering into negotiations for a treaty such as an FTA.
- Mandatory consultation with all stakeholders: The executive should be under an obligation to consult all stakeholders, respond to their concerns and make this information publicly available.
- Dedicated parliamentary committee to scrutinize the FTA: The Indian Parliament should constitute a committee on the lines of the U.K.’s IAC that will scrutinize the strategic objectives behind entering into an FTA.
- Mechanism to ratify the FTA by parliament: The executive should place the FTA on the floor of Parliament for a certain duration, allowing Parliament to debate it, before ratifying it.
FAQs :
1. What does FTAs Include?
Answer : FTA include multiple trade aspects: FTAs cover a wide array of topics such as tariff reduction impacting the entire manufacturing and the agricultural sector; rules on services trade; digital issues such as data localization; intellectual property rights that may have an impact on the accessibility of drugs; and investment promotion, facilitation, and protection.
2. Name the countries with which India is negotiating on FTAs.
Answer : India is negotiating FTAs with countries such as the European Union, Canada, the U.K., and Israel.