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Foreign Trade Negotiations and How Businesses should prepare for it

Dr. Arpita Mukherjee, Professor, Indian Council for Research on International Economic Relations (ICRIER) addressed a Special Session on ‘India’s Negotiating Strategies and How Businesses should prepare for it’ orgainsed by Bharat Chamber of Commerce at Kolkata.

In the wake of multiple trade negotiations, Professor Mukherjee emphasised on detailed analysis of global and bilateral trade flows over the last 10 years for the top 20 items by HS code at 8 digit level by the industry as a key factor for the Government to have a better negotiating strategy. In this regard, she said, “for each HS Code, we need to map the supply chain from the original source to the user industry to understand where it stands. The Government in its earlier FTAs did not analyse the Inverted Duty Structure. In case of whiskey, we charge the same duty for ingredients required for making the product as well as the finished product. Moreover, traceability of supply chain restricts Indian exporters especially in the food industry to gain market access.”.

In the context of India-EU Free Trade Agreement (FTA) negotiations, Dr. Mukherjee observed that in case of Geographical Indications (GI), EU seeks access to mainly value added food items, however, India has mainly handloom and handicraft products for access in the EU. This may lead into a trade imbalance. Rather, many industry associations have shown their interest in doing FTAs with the specific markets in EU, she stated.

Speaking about the India-UAE CEPA, Professor Mukherjee remarked, “India was more innovative in its negotiations with UAE”. In this regard, she added, “India is expected to benefit from preferential market access provided by the UAE on over 97 % of its tariff lines, which account for 99% of Indian exports to the UAE in value terms. Apart from trade in goods and services, new areas such as digital trade and government procurement have been covered. Another innovation in this FTA is regulatory cooperation in pharmaceutical sector,” she added.

Talking about RCEP, Professor Mukherjee stated, “RCEP did not work out for India as there were a lot of sensitivities. However, the RCEP delivered to all the conflicting countries. It developed a framework where Japan and South Korea got together otherwise they would never sign a bilateral trade agreement. They actually signed Geostrategic Rules of Origin and not a geostrategic tariff reduction like many of us thought. The RCEP covered SME collaboration, sustainable trade, digital trade, etc. many of which are parallel negotiations in the WTO.”

Earlier in his Welcome Address, Mr. N. G. Khaitan, President observed that India may have to face implications for staying out of the Joint Statement Initiative (JSI) on e-commerce. India has a large pool of technically skilled manpower and start-up/innovation eco-system that can analyse this data successfully. The combination of the two would make India an ideal location for developing data centres and associated analytics and related data services centres.

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