External Preferential Trade Agreements and the Indian Economy: An Analysis of Impacts and Counter Measures

The slow progress of negotiations at the World Trade Organization has had a gradual shift in policy focus of countries from multilateralism towards regionalism. As an outcome of this, regionalism has registered a phenomenal growth worldwide. Over the last two decades, the number of PTAs/RTAs has increased more than fourfold and there are numerous comprehensive economic partnership agreements under negotiation.

India’s response to this changing scenario has been slow and it has not gained much from its own preferential agreements. Besides this, compounding worries of receding exports in its traditional markets due to competitive pressures from other exporters has increased its trade deficit in the last few years. This can be due to the preferential access given to competing countries through PTAs.

Three of the most important external trade agreements that are being negotiated, from the point of significance for the Indian economy are the EU-ASEAN Free Trade Agreement, the Trans-Pacific Partnership agreement (TPP), and the Trans-Atlantic Trade and Investment Partnership agreement (TTIP). CUTS International with support from Department For International Development (DFID) supported Knowledge Partnership Programme (KPP) (through IPE Global, New Delhi) has undertaken this study to bring out the effects of these three mega Preferential Trade Agreement on the Indian economy. The project will also look into the effects this would have on poverty.

The overall aim of the project is to generate research results on the impacts of three selected external trade agreements on the Indian economy and use the same for informed policy decisions so that India becomes better prepared for facing the challenges of exogenous supply-demand shocks.

Key objectives are to:

Identify possible export diversion effects on labour intensive sectors and trade intensive sectors with high concentration of small and medium scale manufacturing unit.
Conduct extended and sectoral analysis of diversion of trade (goods and services, exports and imports) and allied economic transactions (trade-related investments) from India vis-a-vis the participating countries in the EU-ASEAN FTA, TPP, and TTIP agreements.
Analyse the impact of these PTAs on labour intensive and small scale sectors and to frame policy responses to prevent negative impacts on poverty reduction.
Generate awareness among the key Indian stakeholders including trade policy-makers in the Department of Commerce, GOI, other government departments, apex business organizations including sectorial bodies, farmer groups, consumer groups and other civil society organizations, trade unions and media and policy advocacy.

ACTIVITIES	OBJECTIVES AND OUTPUTS
Literature review(November 2013 – February 2013)	To review the existing literature and increase the knowledge on the subject matter To arrive at a suitable methodology to analyse the impact of an external PTA To select the most threaten sector of the economy
Inception meeting (January 2014)	To discuss research methodology, strategy for field research, stakeholder consultations, dissemination strategy and meeting with project advisors
Secondary data analysis (January 2014 – April 2014)	To analyse relevant data on the subject matter To generate a list of threatened as well as sensitive products
Field research and primary data analysis <(May 2014 – August 2014)	To collect information from the industry on the would be effects of external PTAs
Stakeholder consultation Meeting ( September 2014 – December 2014)	To make relevant stakeholders aware of the effects of the three mega PTAs
Negotiating briefs and research report (January 2014 – February 2014)	Establishment of an advanced analytical model to analyse the impact of external PTAs on an economy including their impact on imports, services, investment, etc.
Dissemination meeting ( March 2014)	To present the final result of the research To present a set of policy recommendations

Brainstorming Meeting
Mega FTAs and the Indian Economy- Analyses of Impacts and Counter Measures
January 24, 2014, New Delhi, India

CUTS Centre for International Trade, Economics & Environment (CUTS CITEE)

D–217, Bhaskar Marg, Bani Park
Jaipur 302 016, India
Ph: +91.141.2282821
Fax: +91.141.2282485
Email: citee@cuts.org
Web: http://www.cuts-citee.org/

Key objectives are to:

EVENTS

RESEARCH REPORT

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