Implication of RTAs & FTAs on Kerala's Agri-sector

India's Current Engagement of FTAs and PTAs

The objective of World Trade Agreement (WTA) is to establish a multi-lateral trading system. However, it permits regional and preferential or free trade agreements as per the enabling clauses. Trade agreements differ widely depending on their objectives, coverage of products/services, rules of origin, negative lists/sensitive lists, investment related measures and coverage of other diverse aspects of agreement. Depending on the degree of regional integration brought about by them, trade agreements are broadly classified in to five types.

1. Preferential Trade Agreements (PTAs) regional agreement in which members of the PTA impose a preferential tariff or lower customs duty on the products originating from the member countries.

2. Free Trade Agreements (FTAs) FTA is a special case of PTA where all tariff and non-tariff barriers are abolished and free access is allowed to the products of member countries. In both PTA and FTA, each member is free to maintain different most-favoured-nation (MFN) barriers on non-members. Rules of Origin between the members of FTA is agreed to ensure that genuine products of the FTA partners alone are given duty-free access (World Bank 2005).

3. Customs Unions (CUs) A Customs Union moves beyond a free trade area by establishing a common external tariff on all trade between, members and non-members. Customs Unions typically contain mechanisms to redistribute tariff revenue among members.

4. Common Markets (CMs) A Common Market deepens a customs union by providing free flow of factors of production such as labour and capital in addition to the flow of outputs.

5. Economic Unions (EUs) In an Economic and Monetary Union, members share a common currency and macro-economic policies (Example European Union).

The schematic illustration of formal regional trading arrangements visualised by Das (2001) based on the conceptualization of Low (2001) is given below.

Spectrum of Formal Regional Trading Arrangements
 

There is only a very shallow integration between PTAs, FTAs and Custom Union whereas a deep integration exists between Common Markets and Economic Unions

Over a period of time there has been an explosive growth in regional and preferential trading system in the form of Regional Trade Agreements and Preferential/ Free Trade Agreements (PTA / FTA).

India is also involved in a number of RTAs andFTAs.India is currently involved in 19 free trade negotiations. These FTA's and RTA's have far reaching impact on Kerala's economy and agricultural sector especially Indo-Sri Lanka, Indo-SAARC and Indo-ASEAN- agreements

India is currently engaged in following RTAs and PTAs

• Bangkok Agreement 1975

• Global System of Trade Preferences (GSTP)

• BIMST-EC FTA (Bangladesh, India, Myanmar, Sri Lanka, Thailand Economic Cooperation) 1997

• Framework Agreement for Establishing Free Trade between India and Thailand

• Indo-Sri Lanka Bilateral Free Trade Area (ISLFTA) and the Proposal for Comprehensive Economic Partnership Agreement (CEPA)

• Agreement on South Asian Free Trade Area (SAFTA)

• Frame of Agreement on Comprehensive Economic Cooperation between Association of South East Asian Nations (ASEAN) and India (ASEAN-INDIA-CEC)

• India-South African Customs Union (SACU) Framework Agreement

• Joint Study Group (JSG) with Mauritius for Comprehensive Economic Cooperation and Partnership Agreement (CECPA)

• India-Gulf Cooperation Council (GCC) Framework Agreement

• Joint Study Group with China

• Joint Study Group between India and Republic of Korea and between India and Japan

• India – Egypt PTA

• Pan-ASEAN-FTA

• New Initiatives