India’s FTAs with ASEAN, Japan and Korea have widened trade deficit: Study

India’s FTAs with ASEAN, Japan and Korea have widened trade deficit: Study

News:

According to a study titled ‘India’s CEPAs with ASEAN, Japan and Korea’ published by Third World Network, India’s three existing Comprehensive Economic Partnership Agreements (CEPA) with ASEAN, Japan and South Korea have led to increasing trade deficits

Important Facts:

Key takeaways from the study:

1. India’s trade imbalance with ASEAN, Japan and South Korea has been steadily increasing.   Trade deficit with the three countries, which stood at $4.5 billion in 2004 and $16.4 billion in 2010, rose to $29.7 billion in 2015. In 2016, it marginally decreased to $26.6 billion.
2. The report highlights a major concern that CEPAs not only resulted in rising imports but also a progressive slowdown of exports even when additional market access is being provided to India.
3. The study also observed that none of the pacts resulted in significant liberalisation in the movement of skilled professionals.

Significance of the study:

• The study is significant, given the government is currently focussing on how to make India’s free trade agreements deliver more for all stakeholders.
• The study will also be helpful for analysing Regional Comprehensive Economic Partnership (RCEP) negotiations.

Additional Information:

Comprehensive economic partnership agreement (CEPA):

It is a kind of free trade agreement between two countries. CEPA is more comprehensive than an FTA in terms of coverage of areas and the type of commitments. While a traditional FTA focuses mainly on goods; CEPA offers a holistic coverage of many areas like services, investment, competition, government procurement, disputes etc.