unacademy 01st January 2019 Important Editorial Discussion(The Future of Free Trade) Presented By: Prabhakar Jha
In 2018, it has been considered that more than any other policy area, trade was "disrupted". Constituencies that have traditionally opposed free-trade agreements (FTAs) are now cheering their virtues, and countries not known for their free-trade sensibilities-including China, Russia, and France-are nominating themselves as the defenders of the global trade system.
. Current Situation with FTAs President Donald Trump pulled the US out of the 12-country Trans-Pacific Partnership (TPP), but the remaining 11 signatories have implemented the bulk of the agreement on their own while leaving the door open for the US to rejoin in the future. More countries have shown an interest in joining, suggesting that the TPP could eventually extend well beyond what was originally envisioned. [Perhaps it will expand in the lines of a new GATT system] . The updated North American Free Trade Agreement-now to be called the United States-Mexico-Canada Agreement-is largely based on the TPP template, which already included Canada and Mexico, along with some noteworthy additions. . The European Union (EU) is implementing FTAs with Canada, Singapore, Vietnam and Japan, and pursuing deals with Australia, Mexico, New Zealand, the Association of Southeast Asian Nations, Mercosur (Mercosur, officially Southern Common Market is a South American trade bloc) and others. The Pacific Alliance continues to expand trade and other partnerships in Latin America. . The Regional Comprehensive Economic Partnership (RCEP) is proceeding apace in the Asia-Pacific region. And the African Union has made more progress toward implementing the Continental Free Trade Agreement (CFTA).
By surrendering its global leadership role, the US has lost the trust of its closest allies and partners and handed a gift to its adversaries. In this scenario, the EU or China might supplant the US as the global rule-maker, or there will be no rule- maker, and the international order will be governed by drift (i.e without a leader) Future of FTAS It is too early to say which scenario will play out. Doing well by doing good can't be just a tagline.
India and FTAs . India's exports to FTA countries has not outperformed overall export growth or exports to the rest of the world. FTAs have led to increased imports and exports, although the former has been greater. India's trade deficit with ASEAN, Korea, and Japan has widened post-FTAS .According to Economic Survey 2016-17, FTAs have had a bigger impact on metals on the importing side and textiles on the exporting side. A 10% percent reduction in FTA tariffs for metals increases imports by 1.4 % . India's exports are much more responsive to income changes as compared to price changes and thus a tariff reduction/elimination does not boost exports significantly.
GS And GA faculty @ Mahendra's Coaching Institute. Teaching Polity, and international relations for 7 years