Bilateral Trade Agreements – Issues and Concerns for ... - Equations

Bilateral Trade Agreements: Issues and Concerns for India 25
3.0 Millstones before
reaching Milestones
When there are so many trade agreements
being planned with different parts of the world,
there are also bound to be many different kinds
of problems in negotiating each. Firstly, the various
lobbies that influence the government’s negotiation
position on these agreements are also not in
agreement about their stand. In India, the two
leading industry lobbies, viz. Confederation of
Indian Industry (CII) and Federation of Chambers
of Commerce and Industry (FICCI) take strikingly
differing positions on the Indo-Singapore CECA
alone.
It is not only industrial lobbies that are arguing
over the acceptability of trade agreements, with
their motives of profit making; research bodies,
that are supposed to be non-partisan and provide
intelligence to the policy-makers in matters of
international economic and political relations, ‘lock
horns over FTAs’. The inconsistency of the research
base of the country could lead to confused decision
making or one depending on which party was
able to influence the government better. An
example is the Indo-US FTA, which was first being
negotiated in services only. Deviating from this
position, the US government has now stated that
it would like the FTA with India to be more
comprehensive and cover other sectors as well.
Why this decision came as suddenly as it did is
something that has not become apparent.
These are only the beginnings of the problems
that arise when negotiating trade agreements.
Probably the most contentious issue surrounding
these agreements is that of the ‘rules of origin’
(RoO).
“Rules of origin have become an essential part
of any trade policy regime, for commercial policy
tools, more often than not, discriminate among
countries. Administration of quotas, preferential
tariffs, anti-dumping actions, countervailing duties,
government procurement, etc, requires clearly
defined rules of origin. The rules of origin are also
important for application of labelling and
marketing requirements as well as for collection
of trade statistics. But, the process of determining
origin might have been relatively easy and dispute
free until recently, because production of individual
commodities rarely involved more than one
country. It is the growing internationalisation of
production and consequent involvement of more
than one country in the production of most
commodities that made the origin of commodities
a contested terrain.” (CDS WP 353, Dec 2003)4
It is almost rare today that a product being
exported, is made wholly by the exporting country,
4 Centre for Development Studies, Tiruvanantapuram, Working Paper 353 December 2003. The WTO Agreement on Rules of Origin: Implications for South
Asia. K N Harilal and P L Beena}