FINAL Presentation trade blocks

NAFTA

MERCOSUR

EU

ASEAN

SAARC

APEC

GCCACC

TRADE BLOCS AND FTAs : EMERGING OPPOURTUNITIES FOR INDIA

PRESENTERS

• Sujay Saxena (44)• Tony Martin Tom

(57)• Praveen S (43)• Abhishek Tandon

(21)• Kamlesh Bind (08)• Gaurav Sharma

(47)

• Sukhmani Grewal (16)

• Shalu Goyal (15)

• Ira Malik (27)• Astha

Pasricha (33)

Trade blocsDefinitionA trade bloc is a type of

intergovernmental agreement, oftenpart of a regional intergovernmental

organization, whereregional barriers to trade (tariffs and

non-tariff barriers) arereduced or eliminated among the

participating states.

EU

AFRICAN UNIONUNION OF

SOUTH AMERICAN NATIONS

CARRABIAN COMMUNITY

CENTRAL AMERICAN

INTEGRATION SYSTEM

ARAB LEAGUE

ASSOCIATION OF SOUTH EAST

NATIONS

NAFTA

SAARC

PACIFIC ISLANDS FORUM

EURASIAN ECONOMIC

COMMUNITY

6 Levels of Economic Integration

Preferential Trade Agreement (PTA) • A preferential trade agreement is perhaps

the weakest form of economic integration. In a PTA countries would offer tariff reductions, though perhaps not eliminations, to a set of partner countries in some product categories. Higher tariffs, perhaps non discriminatory tariffs, would remain in all remaining product categories.

• This type of trade agreement is not allowed among WTO members who are obligated to grant most-favored nation status to all other WTO members.

Free Trade Area (FTA) • A free trade area occurs when a group of countries

agree to eliminate tariffs between themselves, but maintain their own external tariff on imports from the rest of the world.

• The North American Free Trade Area is an example of a FTA

• FTAs generally develop elaborate "rules of origin". These rules are designed to prevent goods from being imported into the FTA member country with the lowest tariff and then transshipped to the country with higher tariffs.

Customs Union • A customs union occurs when a group of

countries agree to eliminate tariffs between themselves and set a common external tariff on imports from the rest of the world. The European Union represents such an arrangement.

• A customs union avoids the problem of developing complicated rules of origin, but introduces the problem of policy coordination. With a customs union, all member countries must be able to agree on tariff rates across many different import industries.

Common Market • A common market establishes free trade in

goods and services, sets common external tariffs among members and also allows for the free mobility of capital and labor across countries.

Economic Union • An economic union typically will maintain

free trade in goods and services, set common external tariffs among members, allow the free mobility of capital and labor, and will also relegate some fiscal spending responsibilities to a supra-national agency. The European Union's Common Agriculture Policy (CAP) is an example of a type of fiscal coordination indicative of an economic union.

Monetary Union • Monetary union establishes a common

currency among a group of countries. This involves the formation of a central monetary authority which will determine monetary policy for the entire group. The Maastricht treaty signed by EU members in 1991 proposed the implementation of a single European currency (the Euro) by 1999.

Country in Focus: India

Trade Relations And FTAs

SAARC & INDIA• South Asian Association for Regional Cooperation

• Founded in December 1985

• Headquarters – Kathmandu, Nepal

• Dedicated to economic, technological, social, and cultural development emphasizing collective self-reliance.

• Meetings of heads of state are usually scheduled annually; meetings of foreign secretaries, twice annually

Membership• Members – Bangladesh– Bhutan– India–Maldives– Nepal– Pakistan– Sri Lanka– Afghanistan

(2007)

• Observers – Australia– China– Burma– European

Union– Iran– Japan–Mauritius– South Korea– United States

• Future Members– PRC– Indonesia– Iran– Russia–Myanmar– South Africa

SAARC Charter• To promote the welfare of the people of South Asia and to

improve their quality of life;• To accelerate economic growth, social progress and

cultural development in the region and to provide all individuals the opportunity to live in dignity and to realize their full potential;

• To promote and strengthen collective self-reliance among the countries of South Asia;

• To contribute to mutual trust, understanding and appreciation of one another's problems;

• To promote active collaboration and mutual assistance in the economic, social, cultural, technical and scientific fields;

• To strengthen cooperation with other developing countries;

• To strengthen cooperation among themselves in international forums on matters of common interest; and

• To cooperate with international and regional organisations with similar aims and purposes.

Agreements• SAFTA - South Asian Free Trade Area– 12th SAARC summit at Islamabad on 6

January 2004– free trade area covering 1.6 billion people– zero customs duty on the trade of

practically all products in the region by end 2016.

• Avoidance of double taxation• SAARC Food bank• SARSO

16th SAARC SUMMIT• Theme - “Towards a green and happy south

Asia”.• India-Pakistan relations• “India factor” – – India has geographically, economically and

politically a big brother image.– Raised negative thoughts and fears among the

other members

• Announcement of a fund by Indian PM– to meet with the challenges of climate change

and to cater for the needs of effective adaptation and capacity building of small nations.

16th SAARC SUMMIT• Indo-Pak meeting on 29th April, between Prime

Minister Man Mohan Singh and his counter part Yusuf Raza Gilani.– India insisted on Pak to take some credential action

against the 26/11 perpetrates, LeT and Hafeez Saeed

– Pakistan’s emphasis remained on delinking of terror from talks and an immediate return of composite dialogue

• No progress took place on SAFTA• No regional solution of Afghan problem.• Rising interference of superpowers such as USA

and China in south Asia too did not become an issue of concern for the leaders of subcontinent.

Importance to India• Bangladesh and Sri Lanka view India as more

interested in creating barriers against their exports than in spurring regional economic integration

• India’s protectionist tendencies have allowed China to don the mantle of regional economic leader. Instead of India emerging as facilitator of socio-economic development in Sri Lanka, Nepal and Bhutan, it is China’s developmental assistance that’s having a larger impact

Importance to India• China’s strategy of using proxies started with

Pakistan and has gradually evolved to include other states in the region, including Bangladesh, Sri Lanka and Nepal. It is entering markets in South Asia more aggressively through both trade and investment, improving linkages with South Asian states through treaties and bilateral cooperation.

• Most states in the region now use the China card to balance against the predominance of India.

Importance to India• India’s structural dominance in South Asia makes

it a natural target of resentment among its smaller neighbours. Yet, there is no hope for regional economic cooperation in the absence of Indian leadership. The failure of India in countering China’s rise has made it even more unlikely that such cooperation will evolve productively. As the two regional giants compete with each other in the near future, they will be more focused on their relative gains vis-à-vis each other than in the absolute gain that regional cooperation can bestow.

Mercosur• The Common Market of the South, Mercado

Común del Sur in Spanish or Mercado Comum do Sul in Portuguese, was formed under he Treaty of Asunción as a trading block.

• Formed in 1991• Full members : Argentina, Uruguay, Brazil,

Paraguay, Venezuela(2006).• Associate members: Chile, Bolivia, Colombia,

Equador, Peru.• Observer : Mexico• Free trade partners : Egypt and Israel• Headquarter : Montevideo( Uruguay)• GDP size : 2.26 tn USD(2008)

Mercosur ( cont..)• MERCOSUR encompasses roughly 50% of Latin

America’s Gross Domestic Product, 43% of its population, 59% of its total landmass, 50% of its industrial production and intra-regional trade, and 33% of total Latin American foreign trade. Its nations’ per capita income is 30% higher than that of Latin America as a whole.

• The largest country in the trade pact, Brazil, accounts for close to 80% of the population of MERCOSUR .

• Official languages : Spanish and Portuguese.• Mercosur and Andean community of nations: Both of

these enjoys the status of custom unions and have integrated into Union of south American nations(UNASUR) under the treaty of Unasur Constitutive Treaty  which was signed on May 23, 2008

Objectives • Free transit of produced goods, services and factors among

member states.• Increase regional trade by lowering tariffs and non-tariff barriers to

trade.• Move member countries’ economies away from import-

substitution models and towards more open economies based on trade and exports.

• Promote convergence of regional economic policies.• Develop institutional groups to address social issues such as

education, labor, culture, the environment, and consumer protection. As an example, in the late 1990s the MERCOSUR nations declared the trading block a nuclear weapons free zone, and issued their commitment to peaceful applications of nuclear energy.

• The creation of a customs union through the implementation of a Common External Tariff (CET) system along the lines of the European Union.

• Coordination of macroeconomic and sectorial policies of member states relating to foreign trade, agriculture, industry, taxes, monetary system, exchange and capital, services, customs, transport and communications, and any others they may agree on, in order to ensure free competition between member states.

• The commitment by the member states to make the necessary adjustments to their laws in pertinent areas to allow for the strengthening of the ’Integration process’.

Mercosur-India • A Framework Agreement was signed between India and

MERCOSUR on 17th June 2003 at Asuncion, Paraguay.• The aim of this Framework Agreement was to create

conditions and mechanisms for negotiations by granting reciprocal tariff preferences and also to negotiate a free trade area between the two parties in conformity with the rules of the World Trade Organisation. 

•  As a follow up to the Framework Agreement, a Preferential Trade Agreement (PTA) was signed in New Delhi on January 25, 2004. The aim of this Preferential Trade Agreement was to expand and strengthen the existing relations between MERCOSUR and India and promote the expansion of trade by granting reciprocal fixed tariff preferences with the ultimate objective of creating a free trade area between the parties.  

•  The India-MERCOSUR PTA provides for five Annexes. These five Annexes had been finalized during six rounds of negotiations in order to operationalise the PTA. These have been signed between the two sides on March 19, 2005, upon the conclusion of G-20 Meeting in New Delhi.

Mercosur-India (cont...)The Five annexes :• Annex I to the PTA- Offer List of MERCOSUR for tariff

concession on Indian products in MERCOSUR. It contains 452 products.

• Annex II to the PTA- Offer List of India  for tariff concession on MERCOSUR’s products in India. It contains 450 products.

• Annex III to the PTA- Rules of Origin• Annex IV to the PTA – Safeguard Measures • Annex V to the PTA – Dispute Settlement Procedure (DSP).• Trade stats : Total trade of US $ 4773.39 million 2007-08

exports of about US $ 2904.8 million and imports stood at about US $ 1868.39 million during the same period.

• Trade volume between Mercosur and India should reach 17 billion US dollars by 2012 and 30 billion dollars in 2030. 

• Major product groups covered in the offer are food preparations, organic chemicals, pharmaceuticals, essential oils, plastics & articles thereof, rubber and rubber products, tools and implements, machinery items, electrical machinery and equipments.

NAFTA & INDIAThe North American Free Trade Agreement

(NAFTA ) is a trilateral tradebloc in North America created by the

governments of the United States,Canada, and Mexico. • Secretariats - Mexico City, Ottawa and

Washington, D.C.• Official languages - English, French and

Spanish• Membership - Canada, Mexico, United States• Establishment - Formation1 January 1994 • Area - Total21,783,850 km² (1st)• Population - 2008 estimate445,335,091 (3rd) 

- • GDP 2007 estimate - Total$15,857

billion (1st) -

Benefits• Benefit’s the importers by reduced or

duty free goods.• No MPF from Canada for NAFTA goods• Can make the exporter more competitive

then other non-participating countries• 200% increase in trade among the 3

countries.• Increase market access within each

country.LIMITATIONS• It has negative impacts on farmers in

Mexico who saw food prices fall based on cheap imports from U.S. agribusiness

• It has negative impacts on U.S. workers in manufacturing and assembly industries who lost jobs.

• Critics also argue that NAFTA has contributed to the rising levels of inequality in both the U.S. and Mexico.

• Some economists believe that NAFTA has not been enough (or worked fast enough) to produce an economic convergence, nor to substantially reduce poverty rates

Importance to India• Trade and commerce have been at the center

of the US economic relations with India. • Merchandise, polished diamonds as well as

jewelry, automobiles and parts, textile, organic chemicals and engineering equipments are being exported to US from India

• In 2005 diamonds and precious stones were the leaders with 29% of the total goods exported. Textiles came second with 25% and iron and steel were third with 5.73%. Organic chemicals were 3.46% of the total exports made and electric machinery fifth with 3.24%.

• In case of the US exports to India engineering equipments, optical and medical equipments, precious stones and metals, aircraft and other aviation equipments and organic chemicals have been the traditional ones.

Importance to India• Mexico is special in terms of its relations in

the International scenario. Presently it is a member of the world's largest economic area NAFTA and has a free trade agreement with the European Union. It has FTAs with some 30 countries

• The Major difficulties behind the promotion of trade between the two nations are – Geographical distance – Lack of direct shipping facilities– Expensive credit– Language barrier – Absence of interest among Indian companies

to explore long-term linkages.

Step taken by GOIFor enhancing the trading between the

two nations an importantstep in this direction was the offer of a

unilateral line of credit foran amount of US $ 10 million by the Exim

Bank of India to itsMexican counterpart, Bancomext, for

promoting bilateral economicand trade relationship.

G.C.C.• The Cooperation Council for the Arab States of the Gulf also

known as the Gulf Cooperation Council is a political and economic union involving six Arab states of the Persian Gulf including states of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.

• Stated Objectives:• formulating similar regulations in various fields such as economy,

finance, trade, customs, tourism, legislation, and administration;• fostering scientific and technical progress in industry, mining,

agriculture, water and animal resources;• establishing scientific research centres;• setting up joint ventures;• unified military presence The Peninsula Shield• encouraging cooperation of the private sector;• strengthening ties between their peoples; and• establishing a common currency by 2010

Benefits of GCC

• Elimination of currency transaction costs will result in savings in both time and money

• Elimination of exchange rate risk would encourage increased intra-Gulf trade and investment.

• Greater transparency in pricing, improved business competitiveness

• An enlarged, unified GCC market, whose present GDP exceeds $300 billion, would offer new trading and investment opportunities.

Challenges to GCC

failure to establish a free trade zone with the European Union

eliminating bureaucracy and allowing project developers a freer hand to speed up the industrialization process

oil prices have had massive swingsUAE and Oman have voted recently to

abandon the common GCC currency goal.

GCC and IndiaFour main areas trade, investments, industrial cooperation including Small and Medium

Enterprises (SMEs)/Small Scale Industries (SSI) and transfer of technology including Information

Technology.  India and GCC have signed a Framework Agreement for

enhancing and developing the economic cooperation between them on the basis of equality and mutual interest

GCC-India Framework Agreement for Economic Cooperation

Importance to India

• India presents itself as a natural market for expanding their operations.

• GCC countries can benefit from India's experience in meeting needs and challenges of Small and Medium Enterprises and turning them into profitable ventures

• Security of supplies, oil facilities etc are crucial for India's long term energy security interests

• Exports and imports, between India and GCC has crossed $91bn in 2008 and has grown at an average annual growth rate touching 50% between 2004-2008.

ASEAN

DESCRIPTION• The ASEAN (Association of Southeast Asian Nations ) bloc was established

on August 8, 1967, when foreign ministers of five countries –

Indonesia, Malaysia, the Philippines, Singapore, and Thailand – met at

the Thai Department of Foreign Affairs building in Bangkok and signed

the ASEAN Declaration, commonly known as the Bangkok

Declaration.

• It is an Association for Regional Cooperation among the Countries of

Southeast Asia. Specialization in production based on comparative

advantage

MEMBERS

Indonesia Malaysia

ORIGINAL MEMBERS (1967)

Vietnam (July 1995)

Brunei Darussalam (January 1984)

Lao PDR (July 1997 )

Myanmar (July 1997 )

Cambodia (April 1999 )

Phillipines Singapore Thailand

FACTS AND FIGURES

• Population - 600 million

• Total Area - 4.5 million square kilometers

• Combined Gross Domestic Product - US$ 1.8 trillion

(approx)

• Total Trade - US$ 850 billion (approx)

Source : www.aseansec.org

OBJECTIVES

• To accelerate economic growth, social progress and cultural development in the region

• Preferential trading including reduced tariffs and non-tariff barriers

• Guaranteed member access to the markets throughout the region

• Harmonized Investment Incentives

• To promote regional peace and stability through abiding respect for justice and the rule of law

ASEAN Free Trade Area

• Agreement by the member nations of ASEAN concerning local manufacturing in all ASEAN countries

• Signed on January 28, 1992 in Singapore

• Elimination of tariff and non-tariff barriers among member countries

ASEAN Plus Three

• A forum for ASEAN plus China, Japan and South Korea primarily to deal with the trade and monetary issues facing Asia.

• Meetings held during each ASEAN Summit .

• May lead to a common market, single currency and even a new Bloc comprising of Northeast and Southeast Asia.

Indian ASEAN Relation• Since its start about in 1990s , the partnership

between India and the ASEAN nation has been developing at quite a fast pace .

• India become a sectoral dialogue partner of ASEAN in 1992 . Mutual interest led ASEAN to invite India to become its full dialogue partner during the fifth ASEAN Summit in Bangkok in 1995 .

Indian ASEAN Relation• The India-ASEAN Free Trade Agreement (FTA) was finally signed,

on 13 August 2009 at Bangkok, after six years of negotiations,

on the sidelines of a meeting of Economic Ministers of ASEAN.

• The agreement was only for trade-in-goods and did not include

software and information technology.

• Negotiations for agreements on services and investment sectors

have commenced only in October 2008 and are expected to be

completed by December 2009.

Indian ASEAN Relation• The FTA will be effective from January 1, 2010. 

• The FTA would eliminate tariffs for about 4000 products (which

include electronics, chemicals, machinery and textiles) out of

which duties for 3200 products will be reduced by December 2013.

• While duties on the remaining 800 products will be brought down

to zero or near zero levels by December 2016. 

• In 2008-09 , India’s export to ASEAN totaled US $19.14 billion

& imported goods worth US $ 26.3 billion from ASEAN .

Economic Gains• The FA hopes to establish the world’s 2nd largest FTA of 1.55

billion consumers with regional GDP of about US$3.1 billion,

and total trade estimated at US$850 billion .

• The FTA provides for:

• Enhanced economic efficiency

• Greater Intra-ASEAN Trade

• Deepened specialization in production based on comparative

advantage

Economic Gains• Trade creation as a result of lowering of tariffs

• Improved factor mobility

• Enhanced intra-ASEAN bargaining power

• Improved regional real income

• Greater market access resulting to economies of scale

• Lower prices and a greater variety of goods and services made

available by market liberalization and increased competition

• Enhanced strategic alliances between ASEAN and India’s industries

• Greater foreign direct investment in the region

• Increased cooperation in R&D

EU -India FTA

What is the European Union?

• Shared values: liberty, democracy, respect for human rights and fundamental freedoms, and the rule of law.

• Largest economic body in the world.

• World’s most successful model for advancing peace and democracy.

• A unique institution – Member States voluntarily cede national sovereignty in many areas to carry out common policies and governance.

• Not a super-state to replace existing states, nor just an organization for international cooperation.

• World’s most open market for goods and commodities from developing countries.

27

7

30

490million

Member States

Combined population of

EU Member States

Percent of world’spopulation

Percent of global GDP

55Percent of combinedworldwide OfficialDevelopment Assistance

Language

EnglishItalianSpanish

Germany French

Business Culture

Cultural considerations play an important role in doing business in EU:

Address People CorrectlyEuropeans are very formal

PunctualityBe on schedule in Scandinavia, Germany and AustriaIn the UK,, be earlyItalians or Spaniards are generally more relaxed

Names and TitleUnusual in Europe for people to use first names immediatelyTittles, especially academic Tittles, are always used in Europe

Handshakes: Standard business greeting throughout Europe ,exception is BritainAll over Europe customary to let women and higher rank to extend their hands first.

Italians shake hands oftenGermans may bow slightlyFrance, a lighter grasp is customaryAustria, a two-cheeked kiss after the working relationship established

Membership of trade bloc

Regional Bloc/ Levels

Free Trade Area Customs Union Common Market Economic Union

EU In force In force In force (EEA) In force but imperfect (EURO)

NAFTA In force

SAARC In force(SAFTA)

ASEAN In force (AFTA) Proposed Proposed for 2015

Proposed

The Andean Community is trade bloc of South American countries of Bolivia, Colombia, Ecuador and Peru.

The African, Caribbean and Pacific Group of States (ACP) is a group of countries (currently 79: 48 African, 16 Caribbean and 15 Pacific),

Central America Common market – Panama, El Salvador, Guatemala, Honduras, and Nicaragua. Costa Rica

EU- INDIA

Of the total EU India trade, Agriculture forms a very small component. India ranks around 12th in EU list of top trading partners in Agriculture. On the export side however, India ranks even lower. Of total EU agricultural exports to the world, India ranked 41st in 2007.

EU- INDIA• Trade in goods• EU goods exports to India 2009:

€27.5 billion• EU goods imports from India 2009:

€25.4 billion• Trade in services• EU services exports to India 2009:

€8.6 billion• EU services imports from India 2009:

€7.4 billion• Foreign Direct Investment• EU investment to India 2009: €3.2

billion• Indian investment to EU 2009: €0.4

billion

EU- INDIA -FTA

• EU-India free trade agreement was one of the top issues at the 11th EU-India Summit held in Brussels.

Banking Sector

• The EU is seeking greater market access and export gains for its large banks through cross-border supply and direct investments. It has sought removal of regulations pertaining to bank branches, numerical quotas, foreign ownership, equity ceilings, voting rights and investment by state-owned companies in foreign banks in India. These would give undue favour to foreign banks, at the expense of the marginalized groups.

Asia-Pacific Economic Cooperation

• Forum for 21 Pacific Rim countries• Established in 1989• Headquarters in Singapore• to promote free trade and economic

cooperation throughout the Asia-Pacific region

• Established in response to the growing interdependence of Asia-Pacific economies and the advent of regional economic blocs in other parts of the world.

• APEC works to raise living standards and education levels through sustainable economic growth and to foster a sense of community and an appreciation of shared interests among Asia-Pacific countries

Asia-Pacific Economic Cooperation

• Accounts for– approximately 40% of the world's

population, – approximately 54% of world GDP and – about 44% of world trade

• 3 Pillars1. Trade and Investment Liberalisation2. Business Facilitation3. Economic and Technical Cooperation

Asia-Pacific Economic CooperationMember economy (name as used in APEC) Date of accession

Australia 1989 Brunei 1989 Canada 1989 Indonesia 1989 Japan 1989 Republic of Korea 1989 Malaysia 1989 New Zealand 1989 Philippines 1989 Singapore 1989 Thailand 1989 United States 1989 Chinese Taipei 1991 Hong Kong, China 1991 People's Republic of China 1991 Mexico 1993 Papua New Guinea 1993 Chile 1994 Peru 1998 Russia 1998 Vietnam 1998

Asia-Pacific Economic Cooperation

• Committees– Budget and Management Committee– Economic Committee– Committee on Trade and Investment– SOM Steering Committee on Economic and Technical

Cooperation– Working Groups include

Agricultural Technical Cooperation Emergency Preparedness Human Resources Development Industrial Science and Technology Marine Resource Conservation Small and Medium Enterprises Telecommunications and Information Tourism Transportation

Asia-Pacific Economic Cooperation

• Between 2002-2006, the costs of business transactions across the region was reduced by 6 percent, (TFAPI)

• hopes to achieve an additional 5 percent reduction in business transaction costs.

• APEC is considering the prospects and options for a Free Trade Area of the Asia-Pacific (FTAAP)

• Criticism– APEC has been criticized for failing to

clearly define itself or serve a useful purpose

– whether it has accomplished anything constructive remains debatable

India and APEC• India has requested membership in APEC, and received

initial support from the United States, Japan and Australia• Membership criteria

be located in the Asia-Pacific region; have substantial and broad-based economic linkages with

existing APEC members and in particular, the value of the applicant's trade with APEC members, as a percentage of its international trade, should be relatively high;

be pursuing externally oriented, market-driven economic policies; and

accept the basic objectives and principles set out in the various APEC declarations, especially those from the Economic Leaders' Meeting. On all these criteria, India today is highly qualified for APEC membership.

India and APEC• Benefits for APEC & India– it has become an important investment destination, with

many sectors open for foreign investment– its trade has increased many fold, encompassing both

goods and services– it has gained experience in dealing with East Asia, with free

trade agreements being worked out with ASEAN and its constituents

– India's relationships with Australia, China, Japan, Russia, Singapore and the US have never been as strong and multi-faceted as now

– The APEC region is home to the world’s four largest economies (China, India, Japan and the United States) and it makes no strategic sense to exclude one of the four

SEANZA

• The establishment of South East Asia, New Zealand, Australia (SEANZA) grew out of a 1956 meeting of central bank governors from the Asia-Oceanic region

• One of the oldest and largest regional central bank groups, membership grew from the original five to 20.

• SEANZA was formed to promote cooperation among central banks by providing intensive and systematic training courses for central bank staffs

• SEANZA also provides an avenue for information exchange on issues and problems of common interest among member economies

• Original members were central banks from Australia, India, New Zealand, Pakistan, and Sri Lanka. The additions were Bangladesh; People’s Republic of China; Hong Kong, China; Indonesia; Iran; Japan; Republic of Korea; Malaysia; Macao, China; Mongolia; Nepal; Papua New Guinea; Philippines; Singapore; and Thailand

India’s FTA with Australia

• India had a total trade of about USD 13.8 billion with Australia in 2009-10 with exports from India being of the order of USD 1.4 billion and with Imports being of the order of USD 12.4 billion

• India's exports to Australia were IT and IT enabled services and other business services

• India’s imports from Australia largely consist of gold, coking coal, copper ores, petroleum and LNG, alumina, wool

• Total foreign direct investment (FDI) inflows received from Australia during April 2000 to November 2010 were USD 0.43 billion.

• Top sectors attracted FDI from Australia are services sector, metallurgical industries, telecommunications, automobile industry and consultancy services

• A study indicates that an Australia-India FTA could result in a net increase in Australia's GDP by up to $32 billion (AUD 45.5 billion) and India's GDP by up to $34 billion (AUD 48.3 billion) over a period of 20 years

• India is fastest-growing major export market. It is Australia’s fourth-biggest export market, up from 13th a decade ago

Advantages of FTA between India and Australia

• Australia–India Free Trade Agreement is estimated to have a beneficial impact on the GDP of both economies. By 2020 Australia’s GDP is estimated to be 0.23 per cent higher than otherwise, and 0.15 per cent higher in the case of India

• The average applied Australian tariff in 2008 is a low 3.2, with nearly 52 per cent of tariff lines being duty free.

• The average applied tariff in India during 2008 is a relatively higher 17.6 per cent with nearly 3.7 per cent of tariff lines being duty free.

• India applies its MFN tariff rate to Australian imports, while Australia applies its developing country tariff rate to Indian imports. Hence Australia already affords India some tariff concessions relative to imports from an MFN country.

• Australia benefits relatively more from the FTA reflects the trading relationship and magnitude of trade barriers — India has higher trade barriers than Australia, and India is currently a more important trading partner to Australia than Australia is to India

• While Australia is estimated to benefit relatively more than India from the FTA, India benefits more in absolute terms. Over the period 2010–30, Australia is estimated to gain A$43 billion in real GDP in (2008) net present value terms, versus India’s real GDP gain of A$46 billion

Sectoral impacts of the bilateral trade and investment liberalization

• 70 per cent of Australian sectors and 68 per cent of Indian sectors are expected to experience an increase in output under the FTA.

• Dynamic productivity gains, arising from greater import competition, learning by doing in export markets and greater foreign investment, are a key factor in seeing such a high proportion of sectors benefiting under the FTA.

India’s FTA with Newzealand

• India–New Zealand FTA- negotiating since 2007 with the establishment of a JSG (Joint Study Group) looking at the feasibility of an Indian-NZ FTA

• New Zealand exports coal, timber, wool and hides to India. They exported goods worth $652 million last year, an increase of 16 per cent, despite declining trade overall.

• Indian exports are valued at $300 million • India is now New Zealand’s 13th largest export

destination. New Zealand had FTAs with Singapore, Thailand China and Malaysia

• India-New Zealand trade can grow four times to $4 billion in 10 years if a market-opening Free Trade Agreement is signed

Concerns over Clash of interests in Agriculture and Dairy Products • India being predominantly an agrarian nation, concerns

about New Zealand’s entry into the agriculture and dairy sector still remain high

• The realization that New Zealand has an economy just 10% the size of India and that it does not compete in several major Indian agricultural products such as rice and wheat, but instead had apples and kiwifruit

• Also, New Zealand has just a 2% share of global milk production and because most of its exports are in solid form and India is overwhelmingly a liquid milk market it’s hardly a threat

• New Zealand could contribute most is in India’s “second green revolution” that India’s political leaders, economists and the Indian Planning Commission are trying to implement

THANK YOU