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THE HIGH COST OF RAISING TRADE WALLS

  • Finance Minister in her Budget speech said that, imports under Free Trade Agreements (FTAs) are on the rise.
  • Undue claims of FTA benefits have posed threat to domestic industry.
  • Such imports require stringent checks,” adding that the government will ensure that all FTAs “are aligned to the conscious direction of our policy”.
  • The case of the Comprehensive Economic Cooperation Agreement (CECA) being negotiated with Australia,
  • FTA’s with Australia, UK, EU, USA are on the way for 2020.
  • While the absence of a TA with any country does not mean that trade will not grow, other changes in the world trading order may become significant hindrances when added to this present scenario.
  • The decline of multilateralism, accelerated by retrenchment of the U.S. and China’s intransigence have all meant the World Trade Organization (WTO) has lost steam as a world arbiter.

Rise of regional agreements

It is clear that most of the world is now divided into regional FTAs, including the North American Free Trade Agreement (NAFTA) for North America, the Southern Common Market (MERCOSUR for its Spanish initials) for South America, the EU, the Eurasian Economic Union (Russia and neighbours), the African Continental Free Trade Agreement (AfCFTA), the Gulf Cooperation Council (GCC) FTA in West Asia, and now the biggest of them all, RCEP, which minus India, represents a third of the world’s population and just under a third of its GDP.

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September 2022
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