End of multilateral trade negotiations? Economic Survey sees a rising preference for bilateral trade deals
Jan 31, 2023
According to the Survey, the limited progress in the multilateral trade negotiations at the WTO is one of the reasons responsible for the increase in FTAs.
Free trade agreements (FTAs) are the flavour of the season and there is a tilt towards bilateral deals over multilateral ones, according to the Economic Survey 2022-23 released by the government on Tuesday.
“As of June 2016, all WTO members now have at least one RTA (regional trade agreement) in force. There has been a substantial rise in the number of trade agreements with 355 notifications of RTAs having been made to the WTO (As of 1 December 2022). Many WTO members continue to be involved in negotiations to create new RTAs, which are mostly bilateral. However, a recent development has been negotiations and new agreements among more than two WTO members,” says the Survey.
According to the Survey, the limited progress in the multilateral trade negotiations at the WTO is one of the reasons responsible for the increase in FTAs. FTAs are viewed favourably by trading countries in comparison to multilateral negotiation at the WTO forum as they are easy to negotiate and provide flexibility to factor in geopolitical considerations.
Regional trade agreements help a country cut tariffs on goods and services and increase cooperation between trading partners. It lowers prices for consumers, and provides enhanced export opportunities for producers, noted the Survey. “RTAs can also have a larger impact on the economy.”
The Survey said that though FTAs can create an environment to enhance trade, the trade growth of a country will depend on many factors.
India has so far concluded 13 FTAs and 6 Preferential Trade Agreements (PTAs). The most recent in the list are the India-UAE Comprehensive Economic Partnership Agreement (CEPA) which was signed on 18 February 2022 and officially entered into force on 1 May 2022 and the India-Australia Economic Cooperation and Trade Agreement (Ind-Aus ECTA), which was signed on 2 April 2022 and entered into force on 29 December 2022.
Further, India is presently engaged in FTA negotiations with some of its trading partners, notable among these FTAs are – (i) India-UK FTA, (ii) India-Canada CEPA/ Early Progress Trade Agreement (EPTA), (iii) India-EU FTA.
[The Economic Times]