Final Report Summary - MULTITRADE (Does Trade Multilateralism have a Future?: Reviving the WTO’s Credibility as the premier Multilateral Trade Negotiating Forum)
India, a staunch votary of WTO-led multilateralism, has recently started following its peers in engaging bilaterally and regionally with its trade partners. However, many analysts contend that the coverage and depth of India’s bilateral and regional trade engagements are rather shallow and not really WTO-plus as mandated under Article XXIV of GATT. Researchers also find that India’s trade agreements are sparsely utilised by traders.
In view of the lack of progress in the WTO Doha negotiations, it might be interesting to assess the economic/ commercial significance of India’s bilateral and regional trade agreements. In doing so, this paper proposes an analysis of the political economy of India’s external trade policy on trade negotiations, in evaluating the economic significance of existing and proposed FTAs by India vis-à-vis its multilateral trade engagement.
The paper finds little impact of FTAs on either enhanced market access or in boosting India’s trade competitiveness in the partner countries; the significant gains in foreign market access was mostly a function of the global economic boom in the naughties, boosted by China’s accession to the WTO in 2001. India’s exports/product specialisation basket is atypical, and reflects its unique resource constraints/endowment and the domestic socio-political, policy and governance challenges.
The paper’s findings also underscore that most of India’s market libersalisation has been unilateral, and given the country’s particular federal democratic system of governance, concludes that market-led liberalisation has a better chance of passing popular censure when compared to negotiated and statute-enforced market opening. This further helps to counter sectoral lobby group influences and related competitiveness concerns, also balancing business perspectives with political economy considerations in the interest of promoting growth, equity and domestic employment. This finding has important ramifications for the negotiation approach and strategy of EU DG-Trade vis-à-vis EU-India FTA and also the ongoing RCEP negotiations.
In view of the lack of progress in the WTO Doha negotiations, it might be interesting to assess the economic/ commercial significance of India’s bilateral and regional trade agreements. In doing so, this paper proposes an analysis of the political economy of India’s external trade policy on trade negotiations, in evaluating the economic significance of existing and proposed FTAs by India vis-à-vis its multilateral trade engagement.
The paper finds little impact of FTAs on either enhanced market access or in boosting India’s trade competitiveness in the partner countries; the significant gains in foreign market access was mostly a function of the global economic boom in the naughties, boosted by China’s accession to the WTO in 2001. India’s exports/product specialisation basket is atypical, and reflects its unique resource constraints/endowment and the domestic socio-political, policy and governance challenges.
The paper’s findings also underscore that most of India’s market libersalisation has been unilateral, and given the country’s particular federal democratic system of governance, concludes that market-led liberalisation has a better chance of passing popular censure when compared to negotiated and statute-enforced market opening. This further helps to counter sectoral lobby group influences and related competitiveness concerns, also balancing business perspectives with political economy considerations in the interest of promoting growth, equity and domestic employment. This finding has important ramifications for the negotiation approach and strategy of EU DG-Trade vis-à-vis EU-India FTA and also the ongoing RCEP negotiations.