The government is trying to finalize the proposed trade deals with a group of nations, with the aim of having all strategic trade partnerships in 2022. Senior officials told Moneycontrol that despite the new incentives so far, the existing deadlines are near and a lot of work needs to be done to complete all the proposed deals.
Eight agreements are important to increase exports
The commerce department is currently negotiating eight free trade agreements, which are considered important to boost exports in the medium to long term. On Monday, Commerce Minister Piyush Goyal said that India is close to ending talks on proposed deals with the UK, Australia and the UAE, while preparing to resume talks with Canada and Israel.
Deals will require more time
Officials said that in this sequence offers for talks on trade are being prepared, talks are being increased and technical and complex disputes are being removed from the agenda. He, however, cautioned that more time would be needed for proper negotiation of technical clauses, gathering industry inputs and addressing potential trade constraints.
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strict deadlines
In the last four years, trade deals have not been able to meet most of the deadlines announced by the government. Officials said, there are common challenges to all the existing deals – tight deadlines have reduced the scope for discussion.
After deciding not to join the Multilateral Regional Comprehensive Economic Partnership (RCEP) pact in November 2019, New Delhi is more keen on doing bilater deals.
A senior foreign trade expert working in the commerce department said, “The negotiators have to act quickly due to strict deadlines. Most of the trade pacts are embroiled in complex issues, so neither side wants to rush. It’s a big challenge.”
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missed the deadline
A prime example is the proposed Comprehensive Economic Cooperation Agreement (CECA) with Australia, which Australia recently missed its Christmas deadline on giving market access to dairy products. The government had announced that the two countries would prepare details on an early harvest trade deal by December 2021, or in just three months.
In the agriculture sector, Australia is keen to gain market access for high value products such as fruits and vegetables, cereals and dairy as well as premium wines. At the same time, the government is cautious about giving opportunities to Australian companies in the Indian market, because it is dominated by a large number of small companies. Deals are also getting stalled due to lack of clarity on e-commerce rules.
current challenges
In the year 2022, the government wants to continue with the early harvest model in trade negotiations. An early harvest trade deal is a deal in which both parties settle on relatively easy deliverable products. In such pacts, specific goals such as reduction of tariffs and market access to selected items are worked out, while the more controversial items are taken off the agenda.
Another official said, “It is expected that through this method, interim agreements can be made with most of the countries. Early Harvest is the best way to end the conversation quickly and expect results soon.”
Given the complexities of foreign trade negotiations between large, complex economic powers, India has opted to stay away from more contentious issues. For the EU, it would be India’s stricter data protection law and for the US, it would be taxation on giant digital companies.
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