By Er. Rajesh Pathak, Bhopal
Strict provisions incorporated in WTO compelled the countries to pave escape route out of it. And this culminated into the form of different mutual trade agreements. As one being Free Trade Agreement(FTA), under which the member countries impose least or no tariff on each other.
Second comes the Custom-Union (CU); under it the countries bound with FTA may collectively engage into trade deal with any other non-FTA country or countries under the provisions of similar tariff- regime.
Third comes the Common-market ; such a custom union is this where for the member nations – more beyond goods and service- the provisions of all the parameters of factor of production like purchasing the land; the investment of labour or capital, the entry of the entrepreneur or running the company to be applied inside any member country like any outfits of its own without distinction or restriction.
Last of them is Economic-Union; it is such a common market where prevails among the member countries the complete coordination regarding macro-economics and exchange rate. Such as, on the issue of employment of any one country, all the countries make deliberation coming together for the resolution. The residents could cross-over each other’s boundaries for the employment . Inflation could be controlled with unified concerted measures. Exchange rate policy should not be subject to volatility. Likewise, the rules and regulations of free movement of goods and services should be binding uniformly to all the countries.
This is broadly all about what is called FTA. However, see what the Film industry’s Shekhar Kapoor has to say about recently signed Indo-British FTA . According to him, this agreement is the one to contain the Starmer’s labour party government from getting scuttled. Today one former colony that is India is offering the support to that colonial power to be called British which once had destroyed its economy.
Leaving it aside, bilaterally this is going to serve India’s interest no less. From this not only the farmers and MSMEs but also over thousands of professionals like Chefs , musicians and yoga-teachers will get the chance to have jobs in Britain. Not only this, those having expertise in IT, finance, health, tourism, entertainment and in such other professions they henceforth could offer their services in digital mode also.
On the other side when Trump has shown more interest in terrif than FTA, India is said to have begun to opt export diversification with making approach to over 50 countries. Besides, world knows maritime-trade has begun to shift from Pacific-Ocean to Indian-Ocean. The way ASEAN, West Asia, Latin America and Japan seem to be eager to strike FTA deal with India is reflexive of this. Japan makes the import of $ 23 billion of textile ; whereas with India too little , which it is too ambitious to increase it now. And from the same Japan , Trump wants to establish industry in US and , above this, to leave 90% of profit there only (US), too. Under the pressure government though might have accepted this shear indiscriminate preposition, it is said that its parliament will never ratify it.
Though Trump doesn’t seem to deflect from his obstinate posture, yet he is not unaware of the fact that his country will get mobile phone either from China or India. So also that from India , US gets 50% of its required pharma product, and critical-care accessories far more. Hence he kept them free from the recent tariff hike. And the commodities that fall under the provision, for them the countries like Saudi Arabia, UAE, UK and others have made back channel approach to India . What the experts in global trade even speculate that from these countries the goods from India might make inroad into US ultimately. The same as world sees China’s tactic of dumping its junk products through Vietnam, Malaysia and such countries’ routes.
Trump might think that the amount accrued with increased tariff could be put into easing out the taxes on US corporates alluring them to be switching over to be investing in the country. However, it is possible to be producing the high end products in the country itself. But to be managing the pool of cheap manpower for the cost-effective domestic commodities for the common Americans is still not going to be easier in the society like that of US despite making hell of pursuits.
(The writer is a civil engineer and a freelancer)
