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TPP shadow over India's $200 bn foreign trade: Assocham
Oct '15
India might have to bear the brunt of 12-nation Trans-Pacific Partnership (TPP) deal as its trade with the TPP countries stood at about $220 billion or about 29 per cent of the country's total trade (exports plus imports) in the financial year 2014-15, the Associated Chambers of Commerce and Industry of India (Assocham) has said while cautioning the government.

“The TPP accord will dismantle trade barriers, reduce transaction costs, promote ease of doing business and possibly benefit consumers with lower prices and more choice in member countries,” Assocham said in a communication to Finance Minister Arun Jaitley and Commerce Minister Nirmala Sitharaman.

India's total exports and imports were of the order $79 bn (26 per cent of country's total exports) and $140 bn (31 per cent of country's total imports) respectively. India's exports to the TPP block rose by four per cent in terms of value (in dollars) even when the country's overall exports fell by over one per cent in 2014-15.

Besides, India had received foreign direct investment (FDI) worth $9.5 bn from TPP countries (Japan, Malaysia, Singapore and the USA) which was close to 40 per cent of the total FDI inflows into India worth about $25 bn in the last fiscal.

Assocham said challenges posed by TPP pact must be treated as an opportunity for domestic industry in rising to the challenge of higher standards in products, services and framework of rules.

“Such mega trade agreements and other negotiations like Trans-Atlantic Trade and Investment Partnership will erode existing preferences for Indian products in established traditional markets like the US and the EU thereby benefitting the partners to these deals” the Assocham letter highlighted.

The TPP block is likely to develop a rules' architecture that might place greater burden of compliance on India's manufacturing and services standards for access to the markets of the participating countries, it pointed out.

“Though it is not a member of TPP, India has much at stake as it may lose export market share due to strong trade diversion effects arising from global price reduction felicitated by widespread tariff elimination,” said D.S. Rawat, secretary general of Assocham.

It has suggested that TPP and the Regional Comprehensive Economic Partnership (RCEP) should evolve into complementary agreements to serve the entire Asia-Pacific Region in a much better way, more so as the two initiatives have overlapping membership.

Though the RCEP also aims to expand liberalisation commitments contained in existing Asean-plus one free trade agreements (FTAs), it is less ambitious regarding depth of reforms, allows far more exemptions for sensitive products and for broad development considerations, and provides more consultative rather than binding dispute resolution procedures. (SH)

Fibre2Fashion News Desk – India

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