Economic Blocs Drivers Of The
One of the results of these factors is the formation of trading blocs.Translations in context of economic blocs in English-Arabic from Reverso Context: However, there is the risk that regional organizations may turn inward.An interesting transformation is taking place in the global trading environment with the emergence of mega-trading blocs – multilateral trading agreements involving significant proportions of global trade - which can change the way trade is conducted in the world. The economic pressures from the Single Market Program and from EU.The strengthening of economic interdependence of countries as a result of international regional integration and globalization of foreign economic relations gives a powerful impetus to the development of economic systems at the state, regional and global levels. In this article, Sharmila Kantha assesses the potential impact of these trading agreements on India, and contends that Indian policymakers and businesses would need to factor them into their future plans.trading blocs is likely to be more prone to high tariffs between blocs than a world of. Emerging multilateral trading agreements, resulting in mega-trading blocs, seem to be replacing global negotiations through the WTO. The blocs are aimed at optimizing the counties. The formation of regional economic blocs is the result of the appreciation that regional development is a core pillar of economic development and that counties are vital drivers of the country’s economy integration can thus provide the critical leverage necessary to realize economic growth.
While India has signed multiple free trade and economic partnership agreements, its track record in aligning its supply chains to these treaties has not been outstanding. Potential implications for IndiaAlthough India is not included in the first two mega-trading blocs above, all of these will significantly impact India. Launched in November 2012, it is proposed to be concluded by 2015, but would probably be delayed. These countries account for around 38% of the world’s GDP and 25% of global trade.The third potential trading bloc is the Regional Comprehensive Economic Partnership (RCEP) comprising the Association of Southeast Asian Nations (ASEAN) plus Australia, China, India, Japan, Korea and New Zealand - involving 45% of the world population and a third of world GDP, and including two of the three largest economies in the world. A fast-track negotiation process aims at completing the treaty this year. On one side of the Pacific are Australia, Brunei Darussalam, Japan, Malaysia, New Zealand, Singapore and Vietnam on the other side are Canada, Chile, Mexico, Peru and the US.
To begin with, they seem to have been envisaged not as much for trade as for strategic purposes - for example, to strengthen the presence of US in Asia. So what should India look at vis-à-vis the mega trade blocs?First, the rationale for these new trading blocs appears to be two-fold. Moreover, the secondary reasons for the trade agreements – incentivising domestic economic reforms and furthering globalisation - have not been achieved as expected.
An elevated level of environmental and labour standards in the mega-trading blocs could pose a challenge for global trade overall. The TTIP, on the other hand, may encourage India’s top trading partners – US and EU - to look elsewhere for markets and sources of goods.Two, there will be an impact of increased trade regulations that India, at this stage of development may not be able to comply with, given the large investments required. The TPP in particular includes several of India’s proximate neighbours such as ASEAN members. It is likely that trade would shift to members of the trading blocs and exclude non-members. In some way, these are luxuries that are affordable by larger and more developed trading nations, but place a compliance burden on emerging economies such as India.One, for India, trade diversion arising from the implementation of these mega-trading blocs may be considerable. These are now going beyond tariffs to encompass non-tariff issues such as environmental sustainability, technical standards, public procurement rules, labour standards, intellectual property etc.
India would need to ensure that the concerns of developing nations are met in the RCEP negotiations.Secondly, India has a number of Free Trade Agreements (FTA) and economic cooperation agreements in place already and is working on several more. If properly handled, this could prove to be a stabilising bloc for global trade and the Asian region. The RCEP encompasses trade, investment and economic cooperation and involves the most dynamic and fast-growing Asian economies. India as a member of RCEP has the opportunity to be part of a mega-trading bloc which is more aligned with its development status.
The idea should be to infuse competitiveness into the system and minimise transaction costs. The new government must accelerate improvement in the climate for doing business with policies such as the Goods and Services Tax (GST), transparent resource allocation (for example, of resources like coal and land), efficient administrative procedures, and faster clearances, among others. For example, Indian companies would need to greatly raise their cost efficiency and productivity parameters through firm-level processes in quality management in order to enhance competitiveness on the global stage.A facilitative policy regime would be crucial to this endeavour. What India should doAt the same time, Indian policymakers and businesses would need to factor in the mega-trading blocs into their future plans.
The government should also work towards strengthening the export marketing effort in partnership with Indian industry. India should make an effort to arrive at a resolution to the current impasse.Another way could be to work with other countries on moderating some of the norms pertaining to compliance and standards or, alternatively, seeking expertise and aid to meet such norms. In July 2014, India played a prominent role in raising the issue of permitted levels of public stockholdings of foodgrains due to which an agreement on trade facilitation (arrived at during the Bali Ministerial Meeting in December 2013) could not make progress. One way of doing this is to continue exerting pressure on WTO to complete the Doha Development Round. Opportunities arising from these issues as well as changing standards and regulations need to be properly communicated to manufacturers and exporters so that they can institute response mechanisms well in time.At the strategic level, the Indian government must examine how to reconfigure the mega-trading blocs to its advantage.
The mega-trading blocs would therefore be expected to keep in mind the concerns of a large emerging economy like India, and the impact of trade reformatting on developing nations as a whole.A version of this article appeared in CII Communique, February 2014. Indian industry would need to understand the potential non-tariff regulations and strategise to meet the requirements as more and more such barriers evolve.India enjoys friendly relations with all countries and has been able to put forward its perspectives on the global platform to great effect.
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