Discuta o sistema de política de livre comércio na índia

Política de Livre Comércio: é Vantagens com Desvantagens | Políticas Comerciais.

Política de livre comércio: são vantagens com desvantagens!

A política de não interferência do governo no comércio exterior é chamada de “livre comércio”. A política de livre comércio implica a ausência de qualquer restrição artificial ou obstáculo à liberdade de comércio de um país com outras nações.

De acordo com Adam Smith, o termo “livre comércio” é usado para denotar “o sistema de política comercial que não faz distinção entre mercadorias domésticas e estrangeiras e, portanto, não impõe ônus adicionais ao segundo, nem concede nenhum favor especial ao antigo .

Em outras palavras, o livre comércio implica completa liberdade de intercâmbio internacional. Sob tal política, não há barreiras ao movimento de mercadorias entre os países, e a troca pode tomar seu curso perfeitamente natural.

Economistas clássicos como Adam Smith, Ricardo e outros defenderam o livre comércio para o bem-estar do mundo.

Vantagens do livre comércio:

Os seguintes argumentos foram avançados em favor da política de livre comércio:

1. vantagem de custo comparativo:

O livre comércio é o resultado natural da vantagem de custos comparativos. Ele permite uma alocação de recursos e mão de obra de acordo com o princípio da vantagem comparativa, que é apenas uma extensão do princípio da divisão do trabalho.

“O fato do livre comércio estabelece uma suposição esmagadora de que as mercadorias obtidas do exterior em troca de exportação são obtidas a um custo menor do que a produção doméstica de seus equivalentes implicaria. Se não fosse esse o caso, eles não seriam importados, mesmo sob o livre comércio ”, diz Jacob Viner.

Foi mantido que o ganho do livre comércio internacional seria o maior devido à especificação internacional baseada na vantagem comparativa. O livre comércio leva à condução mais eficiente dos assuntos econômicos. Em um apelo ao livre comércio, eles também disseram que, mesmo que alguns países não sigam a política de livre comércio, um país industrializado deve segui-lo unilateralmente e ganhará com isso.

Sob o livre comércio, os fatores de produção também poderão ganhar mais, pois serão empregados para melhor uso. Assim, os salários, juros e aluguel serão maiores sob livre comércio do que de outra forma.

Livre comércio adquire importação a taxas baratas. Parece ser um argumento atraente a favor do comércio, pelo menos do ponto de vista do cliente. No entanto, ignora a questão do emprego e os interesses dos produtores no país importador. Aqui tem sido apontado que, sob o livre comércio, quando os consumidores ganham por meio de preços mais baixos, os produtores também ganham, à medida que os fatores de produção são direcionados para uma produção mais lucrativa e especializada, que proporciona melhores ganhos.

O livre comércio amplia o tamanho do mercado, resultando em uma maior especialização e uma divisão mais complexa do trabalho. Isso proporciona uma produção otimizada com custos reduzidos em todos os lugares, beneficiando o mundo como um todo.

A política de livre comércio incentiva a concorrência do exterior, que induz os produtores domésticos a se tornarem mais alertas e a melhorar sua eficiência.

6. Exploração restrita:

O livre comércio impede o crescimento de monopólios domésticos e a exploração dos consumidores devido à concorrência do exterior.

O livre comércio permite grandes variedades de bens de consumo e melhora o bem-estar do consumidor.

Haberler conclui que “o comércio internacional fez uma tremenda contribuição para o desenvolvimento dos países menos desenvolvidos nos séculos XIX e XX, e pode-se esperar que eles façam no futuro, se for permitido que eles prossigam livremente”.

Assim, o livre comércio é a melhor política comercial.

Desvantagens do livre comércio:

No entanto, as seguintes desvantagens da política de livre comércio foram mencionadas por muitos críticos:

1. A política de livre comércio funciona sem problemas se todos os países seguirem o mesmo caminho. Se alguns países não adotarem, o sistema não poderá funcionar de forma lucrativa.

2. O livre comércio pode revelar-se vantajoso para as nações desenvolvidas e tecnologicamente avançadas, mas os países menos desenvolvidos estão certamente em desvantagem devido aos termos de troca desfavoráveis.

3. A concorrência induzida pelo livre comércio é injusta e insalubre. Os países atrasados ​​não podem competir com os países avançados.

4. Ganhos de comércio não são igualmente distribuídos sob livre comércio devido ao estado desigual de desenvolvimento de diferentes países.

5. Um país com desfasamento de pagamentos desfavorável acha difícil superar essa situação sob a política de livre comércio.

6. O livre comércio pode encorajar a interdependência e desestimular a auto-suficiência. Mas, em matéria de defesa, cada país deve ter autoconfiança e auto-suficiência, tanto quanto possível.

Apesar do clamor dos economistas clássicos sobre as vantagens do livre comércio, a política não foi adotada por muitos países ou abandonada por aqueles que já a adotaram. A história econômica indica que, nos últimos dois séculos, o comércio internacional se desenvolveu com proteção.

A política de livre comércio foi abandonada por todos os países pelos seguintes motivos:

(i) Sob o sistema de livre comércio, os países subdesenvolvidos sofrem muito em competir com os países avançados. Por exemplo, a política de livre comércio na Índia adotada pelo governo britânico provou que as únicas indústrias florescentes (artesanato) da Índia foram completamente destruídas devido à concorrência estrangeira.

(ii) Os governos sob o livre comércio observaram desvantagens políticas devido à interdependência econômica. Por independência política, a independência econômica era inevitável; daí o livre comércio teve que ir.

iii) os países não podem permitir a livre importação de produtos prejudiciais e prejudiciais; Portanto, restrições comerciais são necessárias.

(iv) O livre comércio levou a uma concorrência acirrada no mercado mundial, de modo que os exportadores recorreram ao dumping, que nenhum governo pode permitir além de um limite; assim, as restrições tornam-se inevitáveis.

(v) Os países atrasados ​​devem proteger suas indústrias nascentes e, portanto, não podem adotar a política de livre comércio.

O dilema da política comercial da Índia e o papel da reforma interna.

Hardeep S. Puri.

A Índia enfrenta desafios significativos na área da política comercial & mdash; a desaceleração econômica global, o aumento do protecionismo, os acordos de mega-comércio paralisados ​​que poderiam, com o tempo, ser revividos e, talvez mais importante, suas próprias preocupações domésticas. Para que a Índia atinja seus objetivos políticos, o governo e a indústria, particularmente o setor manufatureiro, devem se preparar para oportunidades e maior engajamento em uma arena comercial multilateral em evolução. As prioridades da Índia devem incluir a adoção de medidas políticas para se adequar aos padrões globais e apoiar a Organização Mundial do Comércio (OMC) a relançar as negociações multilaterais.

A Política de Comércio Exterior da Índia visa (1) aumentar a participação do país no comércio global dos atuais 2,1% para 3,5% e (2) duplicar suas exportações para US $ 900 bilhões até 2020. No entanto, a Índia enfrenta uma série de obstáculos: plena compreensão da política comercial e seus benefícios potenciais, um setor manufatureiro pouco desenvolvido, resultados insatisfatórios dos acordos comerciais regionais e relações limitadas, inclusive com seus principais parceiros comerciais. A estrutura da política comercial da Índia deve ser apoiada por reformas econômicas que resultem em uma economia indiana aberta, competitiva e tecnologicamente inovadora. A participação da manufatura no produto interno bruto precisa aumentar através da implementação eficiente de esquemas como a iniciativa Make in India. O capital e a inovação dos EUA precisam trabalhar de mãos dadas com os recursos e o empreendedorismo indianos.

Como chegar lá.

Crie uma parceria global duradoura com os principais parceiros comerciais da Índia, particularmente os Estados Unidos. Os dois países, juntamente com outros países, devem trabalhar para derrubar barreiras ao movimento de bens e serviços e apoiar uma integração mais profunda nas cadeias de fornecimento globais. Participar activa e entusiasticamente da Parceria Económica Global Regional e procurar aderir à Cooperação Económica da Ásia-Pacífico. Dado que a Índia não é parte de nenhum acordo de mega-comércio (e talvez nunca seja), isso seria uma parte importante de uma agenda de política comercial positiva. Ajustar imediatamente aos padrões globais sobre barreiras técnicas ao comércio e medidas sanitárias e fitossanitárias. Com alguns acordos comerciais atualmente suspensos ou sem avançar em sua forma atual, a Índia, particularmente a indústria, tem um tempo valioso para se adequar a esses padrões. Revive a primazia do sistema comercial multilateral. Esse ressurgimento está no interesse nacional da Índia, já que o país é mais bem servido pelo tratamento da nação mais favorecida, em grande parte proporcionado pelos sistemas multilaterais de comércio ancorados na OMC. Ao contrário dos arranjos plurilaterais externos, a OMC oferece o melhor cenário possível para a implementação de uma agenda comercial baseada no desenvolvimento.

Introdução.

De acordo com o ex-primeiro ministro de Cingapura, Goh Chok Tong, a Índia atualmente tem o potencial de impulsionar uma economia global estagnada - semelhante à que a China fez há dez anos. 1 Mas, dado que a Índia enfrenta enormes desafios de desenvolvimento, essa é uma avaliação realista? Com 1,3 bilhão de pessoas e uma economia de US $ 2 trilhões, 2 o país tem mais pessoas pobres do que aquelas de todos os países da África Subsaariana juntos. 3 Entre 1991 e 2013, a economia da Índia produziu apenas 140 milhões de empregos - uma fração dos mais de 300 milhões exigidos; 4 e enquanto 1 milhão de pessoas estão entrando no mercado de trabalho todos os meses, 5 a presença de 17,7 milhões de pessoas desempregadas é uma bomba-relógio que nenhum governo pode ignorar. 6

Em comparação, a China tirou centenas de milhões de cidadãos da pobreza, elevando a renda per capita de US $ 873 em 1999 para US $ 8.027 em 2015. 7 A força do setor manufatureiro da China e um cenário de política comercial global favorável possibilitaram essa notável transformação . Em 1995, quando a China entrou na OMC, suas exportações foram de cerca de US $ 149 bilhões, 8 com um superávit comercial de quase US $ 20 bilhões. 9 Até 2014, as exportações da China subiram para US $ 2,3 trilhões, 10 com um superávit de US $ 382 bilhões. 11 O crescimento econômico da China foi responsável por mais de três quartos da redução da pobreza global, permitindo que o mundo atinja o Objetivo de Desenvolvimento do Milênio das Nações Unidas de reduzir pela metade a pobreza global até 2015. 12.

A Índia é capaz de realizar feitos semelhantes de crescimento econômico e integração na economia global? Seu setor manufatureiro pode se tornar um grande produtor de empregos e bens comercializáveis? Pode aproveitar as oportunidades que a arquitetura de comércio global em evolução pode oferecer?

A Parceria Trans-Pacífico (TPP) e a Parceria Transatlântica de Comércio e Investimento (TTIP) - embora ambas tenham entrado em colapso - não são as únicas manifestações dessa arquitetura em evolução. Vários acordos regionais e sub-regionais de livre comércio (ACL) já estão em vigor ou podem evoluir. Para maximizar as oportunidades dentro deste ambiente, a Índia terá que superar os desafios significativos da política comercial: questões domésticas; a situação global em evolução; e a necessidade de uma agenda de política comercial positiva, como talvez o único caminho viável para a Índia melhorar seu relacionamento econômico com os principais parceiros comerciais. Os Estados Unidos - de longe a maior economia do mundo - continuarão a definir a agenda de política comercial global, e os próprios Estados Unidos terão que refazer alguns de seus objetivos de política comercial à luz dos desenvolvimentos recentes. Não obstante, os Estados Unidos ainda determinarão a agenda comercial mesmo que um vácuo na liderança seja criado na OMC. A Índia poderia, se agir sabiamente e de maneira empreendedora, tirar proveito desse vácuo.

O enigma indiano.

O maior desafio para o desenvolvimento de uma forte política comercial na Índia é seu setor manufatureiro pouco desenvolvido. Embora tenha crescido depois que a Índia embarcou em liberalização econômica concentrada em 1991, a participação de fabricação do produto interno bruto (PIB) caiu para 16,2% em 2015 - 2016 - sobre o que era em 1989 - 1990 (16,4%). 13 A questão de como aumentar substancialmente a participação da manufatura é difícil, sem respostas fáceis. Restrições incluem a disponibilidade limitada de energia e terra, falta de acesso à tecnologia, baixa produtividade, o aumento do custo da mão de obra e dificuldades para fazer negócios. O progresso foi feito, mas tem sido insuficiente. De longe, o mais sério impedimento ao renascimento do setor manufatureiro é a escassez de terras.

O maior desafio para o desenvolvimento de uma forte política comercial na Índia é seu setor manufatureiro pouco desenvolvido.

Na década passada, a Índia assinou ALCs com a Associação das Nações do Sudeste Asiático (ASEAN), República da Coréia, Japão e Malásia. No entanto, algumas pessoas de dentro admitem que os parceiros comerciais da Índia ganharam mais com esses acordos do que a Índia. 14

A experiência da Índia com os acordos regionais de comércio (RTAs) tem sido pouco satisfatória devido à falta de competitividade de seu setor manufatureiro e à falta de inovação e investimento em setores como têxteis, vestuário e produtos farmacêuticos. Isso resultou em pouco entusiasmo para adotar uma postura de política comercial mais ativista dentro do governo, think tanks e a comunidade de política comercial. Dúvidas sobre a atratividade dos acordos comerciais internacionais aumentam quando as preocupações globais com a imigração fazem com que outros países rejeitem a demanda da Índia por uma movimentação mais livre de profissionais (Modo 4 do Acordo Geral sobre o Comércio de Serviços [GATS]).

Apesar desses desafios e dúvidas, aderir a RTAs pode trazer benefícios imensuráveis ​​para a Índia. Talvez o mais importante, tornaria os bens e serviços do país mais competitivos, porque forçaria a indústria indiana a se ajustar aos padrões internacionais em barreiras técnicas ao comércio e às restrições sanitárias e fitossanitárias - um ativo inestimável no longo prazo.

O verdadeiro desafio na Índia. . . é a falta de total compreensão dos benefícios da liberalização do comércio, da paralisia política e, consequentemente, da falta de vontade política.

O verdadeiro desafio na Índia, assim como em vários outros países, é a falta de total compreensão dos benefícios da liberalização do comércio, da paralisia política e, consequentemente, da falta de vontade política. A elaboração de uma política comercial bem-sucedida requer um entendimento da geopolítica e das tendências econômicas globais e a capacidade de negociar com vantagem. Negociações eficazes só são possíveis se os tomadores de decisão tiverem confiança e capacidade para executar as reformas internas correspondentes necessárias - algumas das quais requerem ajustes dolorosos.

Ao longo dos anos, a Índia prestou pouca atenção ao valor da política comercial. Em 1996, por exemplo, ficou claro que o fim das cotas do Acordo Multifibras em 2005 beneficiaria os países em desenvolvimento exportadores mais competitivos e que a modernização da indústria doméstica da Índia era, portanto, crítica. Muitas ações políticas que o governo do Partido Bharatiya Janata empreendeu em 2016, como o esquema de devolução de impostos, haviam sido sugeridas em 1996. Paralisação política, falta de vontade e talvez até falta de compreensão total impediram que as medidas necessárias fossem tomadas em 1996. Se houvesse uma ação oportuna, a participação da Índia no comércio global de têxteis e vestuário teria se tornado muito maior. Em vez disso, Bangladesh, China e Vietnã foram os grandes beneficiários do fim do regime de cotas. Entre 2000 e 2014, a participação da China nas exportações mundiais aumentou de 10% para 36% nos têxteis e de 18% para 39% nas roupas. 15

A Índia não pode servir aos seus interesses econômicos permanecendo indiferente ou totalmente resistindo aos desenvolvimentos da política comercial global e aos mega blocos de comércio que podem se desenvolver. Como observa Biswajit Dhar, da Universidade Jawaharlal Nehru, "no longo prazo, nenhuma grande economia pode permanecer sem ser influenciada por eles, porque o regime de regras discriminatórias terá consequências sobre o comércio mesmo com economias não-membros". 16

Assim, o principal desafio para a política comercial indiana é como reavivar o sistema de comércio multilateral e moribundo ancorado na OMC. Pode ser do interesse da Índia incentivar mudanças para a OMC, desestimulando a liberalização do comércio por meio apenas dos ACRs e ALCs.

Para efetuar essa mudança, a política comercial da Índia precisa ser ousada e imaginativa. Deve iniciar consultas intensivas e abrangentes entre países comerciais dentro da OMC. Dependendo do resultado das consultas, deve apresentar propostas concretas para iniciar as negociações na OMC, colocando o ônus sobre os países desenvolvidos para reagir às propostas da Índia. As propostas podem ter que lidar com as questões espinhosas da agricultura, Modo 4 do GATS e alguns acordos plurilaterais, como o Acordo de Tecnologia da Informação (ITA-2), compras governamentais e solução de controvérsias.

A política comercial da Índia precisa ser ousada e imaginativa. Deve iniciar consultas intensivas e abrangentes entre países comerciais dentro da OMC.

O interesse da Índia está no comércio da nação mais favorecida (NMF) e na segurança e previsibilidade associadas ao sistema multilateral de comércio ancorado na OMC. Assegurar ambos exige que a Índia não seja vista como um spoiler, como é atualmente, em Genebra.

Abordagens passadas e presentes da Índia aos acordos comerciais.

Em 1982, os Estados Unidos fizeram um esforço determinado para obter o comércio de serviços incluídos no Acordo Geral sobre Tarifas e Comércio (GATT), que era essencialmente uma estrutura legal que cobria o comércio de mercadorias e a imposição de medidas de fronteira (tarifárias e não tarifárias). Uma discussão entre William Brock (representante comercial dos EUA) e Shivraj Patil (o ministro indiano do Comércio) na Reunião Ministerial do GATT de 1982 vale a pena ser lembrada. Representando os Estados Unidos estavam Michael Smith (o embaixador dos EUA no GATT) e Andrew Stoler (que mais tarde se tornou vice-diretor-geral da OMC). Do lado indiano, estavam o falecido Abid Hussein (então secretário do comércio), B. L. Das (o embaixador da Índia no GATT) e o autor deste artigo. Depois de uma breve troca de amabilidades, Brock perguntou: Ministro, qual é a posição da Índia sobre os serviços? & Rdquo; Patil disse: "Não-negociável". & ldquo; Nesse caso, & rdquo; Brock respondeu: "Não vejo por que eu deveria estar desperdiçando seu tempo e o meu." Essa foi a Índia de Indira Gandhi. A posição firme da Índia resultou em uma decisão ministerial diluída. Dado que os serviços representam quase 57% do PIB da Índia hoje, é discutível se a Índia tomou a decisão certa na época.

Em contraste, na Conferência Ministerial da OMC de 2015 em Nairobi, o representante indiano sentou-se através das deliberações do grupo seleto, concordou com a evolução do resultado do pacote e, em seguida, expressou decepção após os resultados terem sido achatados. A OMC opera com base no consenso. Qualquer país pode bloquear o resultado se considerar inaceitável. 17

Sucessivas rodadas de liberalização do comércio sob o GATT e a OMC resultaram na redução das tarifas de NMF, embora ainda haja um diferencial significativo entre as tarifas vinculadas e efetivas. Em 1990 & ldquo; 1991, por exemplo, a maior tarifa indiana ficou em 355%, e a tarifa média ponderada ficou em 87%. 18 Em 1996 e 1997, essas tarifas haviam caído para 52% e 22%, respectivamente. Reduções nas tarifas e a remoção de restrições quantitativas e outras barreiras não-tarifárias ajudam a expandir o comércio, mas não podem garantir que as instalações de manufatura não se movam para locais com regimes fiscais mais atraentes ou busquem mercados maiores no exterior. O Vietnã, por exemplo, oferece isenção fiscal de vinte anos para novos investidores. Incentivos e o que os chineses conseguiram realizar constituem um grande desafio de política comercial, não só para a Índia, mas também para vários outros países, inclusive os Estados Unidos.

Política comercial recente da Índia.

Anunciando uma nova Política de Comércio Exterior em abril de 2015, o governo do primeiro-ministro Narendra Modi disse que desejava aumentar a participação da Índia no comércio global de 2,1% para 3,5% e duplicar as exportações (para US $ 900 bilhões) até 2020. 19 A política busca para integrar as iniciativas Make in India e Digital India do governo.

Modi elaborou seu pensamento e estabeleceu um roteiro claro em um discurso em Washington em junho de 2016:

Continuaremos a fortalecer o "Make in India & rdquo; Make in India & rdquo; iniciativa. Não se destina apenas a fabricação para o mercado interno ou substituição de importações. Trata-se tanto de fazer produtos e serviços de classe mundial para todo o mundo. É por isso que, para nós, melhorias no livre comércio são importantes. É muito importante para nós que os países desenvolvidos abram seus mercados, não apenas para bens de países como a Índia, mas também para serviços. Eu vejo isso como uma proposta ganha-ganha para os EUA e para a Índia. A Índia é a futura usina de recursos humanos do mundo com uma população jovem e trabalhadora. Na minha visão, uma parceria entre o capital americano e a inovação e os recursos humanos e o empreendedorismo indianos podem ser muito poderosos. Estou convencido de que podemos fortalecer ambas as nossas economias através dessa parceria. 20

Essa declaração ousada, especialmente na esteira do declínio das exportações por dezessete meses consecutivos desde dezembro de 2014, precisa ser cumprida. 21 Mas, para fazê-lo efetivamente, o governo precisará avaliar continuamente como essas prioridades (por exemplo, a parceria entre o capital e a inovação americanos e os recursos e o empreendedorismo indianos) estão se desenrolando dentro das tendências globais em evolução.

A implementação dos principais esquemas da Índia - o Smart City Project, o Make in India, o Skill India Program e o Digital India - exigirão investimentos estrangeiros diretos e uma ampla reforma e rejuvenescimento do setor manufatureiro da Índia. O governo de Modi fez um bom começo. Em 2015, a Índia atraiu mais investimento direto estrangeiro (IDE) do que a China e os Estados Unidos, triplicando o IDE greenfield, que chegou a US $ 63 bilhões. 22 De fato, a Índia tornou-se o principal país do mundo em IDE greenfield, superando os Estados Unidos (US $ 59,6 bilhões) e a China (US $ 56,6 bilhões).

Implementação dos principais esquemas da Índia. . . exigirá investimento estrangeiro direto e uma reinicialização abrangente e rejuvenescimento do setor manufatureiro da Índia.

A iniciativa Make in India, no entanto, possivelmente se deparou com ventos contrários internacionais causados ​​por recessão, protecionismo e desenvolvimentos tecnológicos, como automação e impressão 3D. Como resultado, o Make in India só pode afetar o mercado indiano, especificamente o setor de defesa.

Relações com os Estados Unidos.

Os Estados Unidos são, de longe, o maior parceiro comercial de um único país da Índia. O comércio bilateral de bens aumentou de modestos US $ 5,6 bilhões em 1990 para US $ 66,9 bilhões em 2014. 23 O valor dos serviços comercializados ficou em US $ 58,8 bilhões em 2012. Durante a primeira visita ministerial de Modi aos Estados Unidos em 2014, os dois lados estabeleceu uma meta de US $ 500 bilhões por ano no comércio de bens e serviços, sem estabelecer um prazo.

Posteriormente, em 8 de junho de 2016, Modi dirigiu uma sessão conjunta do Congresso dos EUA: "Nosso relacionamento superou as hesitações da história", disse. Ele disse, acrescentando que "em todos os setores da Índia em frente, vejo os EUA como um parceiro indispensável". O componente comercial e econômico do relacionamento entre os dois países deve ocupar um lugar de destaque, juntamente com questões relacionadas à política externa e de segurança, na formação de uma parceria estratégica bilateral significativa.

A importância que os dois países atribuem ao fortalecimento dos laços econômicos e comerciais se reflete no parágrafo 29 da declaração conjunta divulgada após a visita de Modi em 2016 aos Estados Unidos:

A fim de aumentar substancialmente o comércio bilateral, eles se comprometeram a explorar novas oportunidades para derrubar barreiras ao movimento de bens e serviços, e apoiar uma integração mais profunda nas cadeias de suprimento globais, criando empregos e gerando prosperidade em ambas as economias. 24

No entanto, os elevados ideais e pronunciamentos dos chefes de Estado e governos não se traduzem, por si só, em cooperação significativa e envolvimento bilateral no mundo real das negociações comerciais. A convergência estratégica que os dois países buscam não se infiltra no segmento de comércio, que, em sua essência, continua sendo adversário. Os Estados Unidos têm estado no banco do motorista, pressionando pela liberalização agressiva do comércio, pela abertura de mercados e pelos mega-blocos comerciais baseados nos compromissos da OMC.

Acordos Comerciais Regionais Relevantes para a Índia.

Parceria Trans-Pacífico.

O TPP é um acordo comercial entre doze países do Pacífico (Austrália, Brunei, Canadá, Chile, Japão, Malásia, México, Nova Zelândia, Peru, Cingapura, Estados Unidos e Vietnã). Esperava-se que o acordo fosse concluído em 2012; Após negociações prolongadas, foi assinado em 4 de fevereiro de 2016. No entanto, o recém-eleito presidente dos EUA, Donald Trump, que havia criticado o TPP durante o período eleitoral, já abandonou o acordo. Teria entrado em vigor quando todos os doze signatários a ratificassem ou, após dois anos, quando membros representando 85% do PIB dos signatários a ratificassem (ver tabela 1). Dado que os Estados Unidos representam 68 por cento do PIB total do grupo, a ratificação não será possível sem a sua assinatura. 25

Dado que os Estados Unidos deram ao seu presidente "fast-track" aprovação - o que significa que o Congresso poderia rejeitar ou aprovar o acordo sem considerar separadamente cada disposição - a probabilidade de uma assinatura dos EUA era baixa em qualquer caso. O TPP figurou com destaque na campanha presidencial dos EUA. A candidata democrata Hillary Clinton apoiou a TPP como secretária de Estado, mas sob pressão de seu principal oponente, Bernie Sanders, uma socialista de Vermont, ela expressou sérias reservas sobre o acordo e jurou proteger os empregos americanos. Os republicanos tradicionalmente defendem o livre comércio, incluindo o TPP; mas Trump baseou sua campanha na hostilidade em relação aos acordos comerciais internacionais e parceiros, particularmente México e China. Seu argumento central era que tais acordos exportam empregos americanos, particularmente empregos industriais. Ele denunciou o TPP.

A mesma retórica antitrade e antiglobalização vista na campanha presidencial dos EUA ecoou argumentos no debate Brexit. Mesmo que o & ldquo; Permaneça & rdquo; o voto venceu, metade do eleitorado britânico sentiu-se claramente alienado. A crise financeira de 2008 e suas conseqüências de crescimento lento nas economias desenvolvidas intensificaram as desigualdades no compartilhamento de ganhos e perdas, exacerbando a desigualdade e as divisões em nível nacional entre os mais instruídos e economicamente prósperos e o resto da população. Tanto o Brexit quanto a posição atual dos EUA sobre o comércio refletem essencialmente a incapacidade dos países industriais avançados de lidar com taxas de crescimento econômico baixas.

Dado que os Estados Unidos rejeitaram o TPP, o acordo será adiado indefinidamente. Depois de algum tempo, no entanto, os Estados Unidos e outros países poderiam tentar renegociar alguns de seus termos. As perspectivas de encontrar um acordo sobre se e como acomodar novas demandas pelos Estados Unidos (e outros países) são difíceis de prever.

Há mais más notícias para o TPP. Um relatório de 2016 da Comissão de Comércio Internacional (ITC) concluiu que o déficit comercial dos EUA com parceiros aumentou em US $ 141 bilhões (418%) de 1989 a 2015. 26 O déficit comercial dos EUA com todos os parceiros não-FTA diminuiu US $ 46 bilhões por cento) desde 2005. Vindo do ITC, que tem tradicionalmente apoiado FTAs, o relatório desencadeou os sinais de alarme.

Embora o TPP não seja implementado em sua forma atual, vale a pena analisar como a Índia se sairia se fosse. Em um estudo preparado para o Conselho Empresarial EUA-Índia (USIBC), C. Fred Bergsten, do Instituto Peterson de Economia Internacional, defendeu firmemente que a Índia tentasse negociar sua entrada no TPP:

O problema de competitividade da Índia é agravado por sua ausência dos novos acordos comerciais megarregionais do mundo, especialmente a Parceria Trans-Pacífico (TPP), mas também a Parceria Transatlântica de Comércio e Investimento (TTIP). Se a China e o resto do Fórum de Cooperação Econômica Ásia-Pacífico (APEC) se unirem a uma segunda etapa do TPP que continua excluindo a Índia, as perdas anuais de exportação da Índia se aproximarão de US $ 50 bilhões. A Índia está sendo deixada para trás pelo sistema de comércio mundial. 27

A Índia poderia desfrutar de ganhos de exportação de mais de US $ 500 bilhões por ano (um aumento de 60%, mais do que qualquer outro país) se juntando a uma TPP expandida ou participando da abrangente Área de Livre Comércio da Ásia-Pacífico que a APEC está considerando agora. 28 A receita nacional da Índia aumentaria em 4% (mais de US $ 200 bilhões) como resultado. 29 A Índia poderia aumentar ainda mais suas exportações participando das principais negociações plurilaterais sobre serviços, bens ambientais e compras governamentais que estão sendo realizadas na OMC.

A Índia poderia aumentar ainda mais suas exportações participando das principais negociações plurilaterais sobre serviços, bens ambientais e compras governamentais que estão sendo realizadas na OMC.

A interseção entre política comercial e política eleitoral invariavelmente produz linhas de falha. A globalização e a liberalização do comércio produzem vencedores e perdedores. Os tomadores de decisão procuram setores pouco convencidos, exaltando as virtudes do acordo comercial proposto, muitas vezes exagerando os benefícios potenciais.

Em 1993, Gary Hufbauer e Jeffrey Schott, do Instituto Peterson, previram que o Acordo de Livre Comércio da América do Norte (NAFTA) levaria a um superávit comercial dos EUA com o México que criaria 170.000 novos empregos líquidos por ano nos Estados Unidos. Menos de dois anos após a implementação do Nafta, Hufbauer reconheceu que suas projeções de trabalho haviam sido totalmente erradas, observando que “a melhor figura para o efeito de trabalho do NAFTA é aproximadamente zero. . . . A lição para mim é ficar longe da previsão do trabalho. 30

O TPP procura influenciar o comércio internacional de três maneiras: reduzindo ou eliminando as tarifas sobre produtos qualificados entre os países membros, regulando o papel das empresas estatais e obtendo coerência regulatória em uma escala sem precedentes entre seus membros. Negotiating partners expressed an interest in comprehensively reducing barriers to trade in goods (including agricultural goods) and services, as well as rates and disciplines on a wide range of topics (including new policy issues that neither the WTO nor existing FTAs cover). All these changes would affect India’s external trade in ways that are difficult to forecast.

Some Indian commentators have argued off the record that India should aspire to join the TPP. But India was not asked to join the TPP and, even if the agreement was to move forward, would unlikely be invited in the coming years under the current circumstances. The agreement’s delay (if not death) gives India breathing space to take corrective domestic actions to manage the consequences of a revised or revived TPP and thereby increase the likelihood of joining a revised TPP at some stage. This provides a best-case scenario for India.

Asia-Pacific Economic Cooperation.

APEC is a forum for twenty-one Pacific Rim member economies that promotes free trade throughout the Asia Pacific region. India is not a member. A report by the Asia Policy Society Institute suggests why it is an ideal time for India to join APEC and illustrates the benefits of and possible obstacles to its membership. 31.

India’s membership in APEC would benefit the government’s development programs, which rely heavily on “greater access to foreign markets, investment sources, and value chains to bolster manufacturing and create jobs at home,” 32 and prepare Indian entrepreneurs and businesses for the changing global economy. An impressive growth rate, coupled with Modi’s persistent efforts at public economic diplomacy in the region and beyond, have given India “hope that it can finally succeed in attaining membership after nearly two decades of disappointment.” 33 Joining APEC could be difficult, however, given the reservations of some members who perceive India’s policies as insufficiently supportive of more open trade and greater regional integration.

India’s membership in APEC would benefit the government’s development programs.

APEC itself would also benefit from India’s participation in the forum, as its members would have better access to the country’s labor supply and investment opportunities and to a consumer market that includes a rapidly expanding middle class of 200 million people by 2020 and 475 million by 2030. 34.

Transatlantic Trade and Investment Partnership.

In terms of ambition and sheer audacity of scale, the TTIP could be ranked at the level of the proposed TPP.

The Transatlantic Trade and Investment Partnership (T-TIP) is an ambitious, comprehensive, and high-standard trade and investment agreement being negotiated between the United States and the European Union (EU). T-TIP will help unlock opportunity for American families, workers, businesses, farmers and ranchers through increased access to European markets for Made-in-America goods and services. This will help to promote U. S. international competitiveness, jobs and growth. 35.

Britain’s decision to leave the European Union effectively put the TTIP on hold in its present form. The partnership will require renegotiation. Nevertheless, it would be useful for India’s Ministry of Commerce to review the chapters on the environment, labor standards, government procurement, state-owned enterprises, and nontariff barriers to at least determine what the country is up against and so that India’s industry can be encouraged to upgrade. India has again been granted valuable breathing space, which its industrial sector should not waste.

Regional Comprehensive Economic Partnership.

Launched in Cambodia on December 20, 2012, the RCEP is an FTA between ASEAN and its FTA partners (Australia, Brunei, China, Cambodia, India, Indonesia, Japan, the Republic of Korea, Laos, Malaysia, Myanmar, New Zealand, the Philippines, Singapore, Thailand, and Vietnam). The sixteen participating countries account for almost half the world’s population, 30 percent of global GDP, and 25 percent of world exports. 36 RCEP seeks to achieve a modern, comprehensive, high-quality, and mutually beneficial economic partnership agreement that will cover trade in goods, services, investment, economic and technical cooperation, intellectual property, competition, and dispute settlement.

India is participating in the RCEP negotiations but appears to be doing so with extreme caution. While there are perhaps valid reasons for this, India should be more forthright because of the following:

Environmental and labor standards are not big issues in this agreement. The agreement gives India an excellent opportunity to negotiate with China, which it has found difficult to do bilaterally. India would have to recalibrate its demands on the movement of professionals (Mode 4), so that its partners respond positively. India could include some common objectives on environment and nontariff barriers that would not be part of the dispute settlement but would instead be “best-endeavor” clauses.

A Road Map for India.

India and the United States were among the original signatories to the GATT in 1947. That agreement’s preamble encapsulates the rationale for trade policy, which continues to be as valid today as it was then. The first of its two paragraphs cites the goals of “raising standards of living, ensuring full employment, and steadily growing volume of real income.” 37 The second cites modalities for achieving them, including “reciprocal and mutually advantageous arrangements directed to the substantial reduction of tariffs and other barriers to trade and to the elimination of discriminatory treatment in international commerce.”

For most of the first thirty years of its existence, the multilateral trading system comprised a negotiated framework of rights and obligations governing trade in goods. It set border measures for both tariff and nontariff barriers. The Tokyo Round (1973–1979), the seventh round of multilateral trade negotiations, reduced tariffs and resulted in a number of stand-alone agreements on nontariff barriers. The fragmentation of the trade system dates back to this round of talks. Member countries could accede to the Tokyo Round agreements on an à la carte basis. India chose to do just that, acceding to only some of these agreements. 38.

India found comfort in MFN trade, which became an article of faith—the only exception being the Generalized System of Preferences, a scheme that extended concessions and preferences on a unilateral basis. As long as India benefitted, it liked the scheme. The minute India became subject to conditions and found itself excluded, it protested, albeit without much success.

For valid reasons, India has found it difficult to accept the inclusion of issues relating to Trade-Related Aspects of Intellectual Property Rights ( TRIPs ), the environment, labor standards, and investment and regulatory matters. India has therefore found it difficult to accede to FTAs, which are invariably designed and operated on a WTO plus basis. India’s problem today is not with TRIPs per se in the WTO, but with what is known as WTO TRIPs-plus standards. India is now fully compliant with WTO TRIPs standards.

The dilemma now is that the WTO is moribund, and developed countries are unwilling to pursue issues except on their terms. Action is therefore shifting to plurilateral agreements in the WTO and RTAs/FTAs. India is a player in neither; it is not a party to either the plurilateral Trade in Services Agreement (TiSA) or the ITA-2 being negotiated at the WTO, although its interests are at stake in both areas.

At the heart of the trade policy differences between the United States and India is intellectual property. India recognizes the need to reward creativity, innovation, and inventions and to balance that against the requirements of public good. The United States allows multinational drug companies to rake in large profits, as part of a healthcare system that is unaffordable even for the average American citizen. India, on the other hand, is the world’s leading manufacturer and supplier of generic drugs. There was therefore understandable concern when the USIBC reported in its submission to the U. S. trade representative that India had given an assurance that it would no longer resort to compulsory licensing. India flatly denied it had provided such an assurance, recalling that it had resorted to compulsory licensing only once. The USIBC’s clarification of April 14, 2016, is interesting:

USIBC recognizes and supports the Government of India’s sovereign right to issue a compulsory license (CL). However, in order to attract investments that are imperative for innovation to thrive in India, the Council and its members seek transparency, consistency and clarity in the legislation and circumstances under which such compulsory licenses can be issued so as to enable well-informed business decisions.

Innovation is the bedrock of Prime Minister Modi’s vision for Make in India, Start Up India and Digital India. USIBC and its members commend the Government of India for its openness to engage in dialogue with the industry in a manner that will grow the economy and bring superior innovation to the lives of Indians. 39.

In May 2016, the government of India released a new intellectual property rights policy. However, if innovation needs to be promoted, perhaps India should have unveiled an innovation incentivization policy, as intellectual property rights are the flip side of the innovation coin. The new policy does not seek to delineate the elements that would promote and incentivize innovation and help release the creative potential and energies of India’s youth, especially graduates of the I ndian institutes of technology and other leading educational and research institutions. It is not clear how the policy would (1) preserve and promote India’s preeminent position as the pharmacy of the world or ensure that India continues to produce drugs and pharmaceuticals of high quality at competitive prices and thus play a role in promoting the basic right to health; (2) protect the right to use the flexibilities under the TRIPs agreement, especially with regard to the issuance of compulsory licensing related to public health; or (3) protect, promote, and enhance India’s genetic resources, prevent biopiracy, and protect traditional knowledge and folklore.

If innovation needs to be promoted, perhaps India should have unveiled an innovation incentivization policy, as intellectual property rights are the flip side of the innovation coin.

A Positive Trade Policy Agenda.

There is overwhelming evidence that trade has contributed to global prosperity, raised standards of living, and contributed to steadily growing real income. 40 Globalization, however, produces both winners and losers. Trade produces prosperity but also inequality; it can have devastating effects on the manufacturing sector if it is subjected to subsidized or dumped products and exchange rate manipulation. Although the trading system provides remedies against unfair trade practices, little can be done if predatory pricing is institutionally entrenched, when entire systems do not work on the basis of market prices and it is difficult to determine where state subsidization ends and enterprise dumping begins.

Developments in global trade policy confront Indian policymakers with some hard choices. 41 An ostrich-like switch-off mode can only exacerbate the country’s problems. A good starting point would be to establish how India went so badly wrong in entering into trade agreements that are so low on ambition and counterproductive to its interests. It is axiomatic that if an FTA results in trade expansion but is in the interest of one partner, it is a badly negotiated agreement. A series of badly negotiated agreements should result in the sacking of trade negotiators, not a turn away from free trade.

India’s ill-conceived trade pacts have resulted in inverted duty structures, high import duties on raw materials and intermediates, and lower duties on finished goods that discourage the production and exports of value added items. 42 The Modi government has been bold in conceptual clarity, but it appears to be handicapped by its inward-looking bureaucracy.

There has to be inner consistency and harmony between the objectives of policy and the implementing modalities. It is not possible to want to increase the share of global trade and create millions of jobs by turning one’s back on trade policy or relying on a trade policy that isolates India from the major trading arrangements globally taking shape.

Trade and foreign policies must by and large be in sync.

Trade and foreign policies must by and large be in sync. The world of trade policy requires give and take. Negotiations for an FTA with the European Union have been languishing since 2007. The European Union is India’s largest trading partner, accounting for 13 percent of India’s total share of goods and services. A good indicator of a country’s external engagements is whether its foreign and trade policies reinforce each other. India has struggled with a foreign policy segment that seeks strategic content with its trading partners and a trade policy segment that is more circumspect and inward-looking, often for good reason.

Conceptual clarity is also required regarding actions that could broadly be categorized as trade promotion and actions that would fall under the rubric of trade policy. India’s merchandise exports have a narrow account for 78 percent of total exports, and manufacturing exports are rapidly losing competitiveness, 43 primarily because of a poor logistics infrastructure and weak trade facilitation.

India’s experiment with special economic zones (SEZs) did not take off. The establishment of free ports or other schemes need to be considered on the merits. 44 One might be forgiven for asking why free ports would succeed if SEZs failed or why the Chinese can organize themselves more effectively than other countries. Meanwhile, a key problem at hand is India’s Supreme Court notice to the center and some states on returning unused SEZ land that belonged to farmers. 45 The governments must consider whether to improve or revise the policy.

Under the rubric of trade policy come issues like the real effective exchange rate and the global trading architecture. India has not compensated for its declining exports to the European Union and the United States with increases elsewhere. Clearly, the trade policy bureaucracy has some explaining to do.

India should take advantage of delays in the TPP and TTIP to set its domestic house in order and register as a major trading nation.

India should take advantage of delays in the TPP and TTIP to set its domestic house in order and register as a major trading nation. If it does not, the prime minister’s grand plan to increase annual trade turnover with the United States to $500 billion and raise India’s share of global trade to 3.5 percent will ring hollow.

India should revive the multilateral trade negotiations at the WTO. Doing so requires farsightedness on India’s part as well as compromises in some of the positions it has taken on agriculture, Mode 4 of GATS, ITA-2, and government procurement. Its offers can be conditional, putting the onus of taking them forward on India’s major developed country partners and the concessions they are willing to grant India. At the end of the day, India’s interests are better served by the WTO and MFN trade than by the myriad RTAs and FTAs.

India does not appear to have any option other than to autonomously adjust to world standards on technical barriers to trade, sanitary/phytosanitary standards, and environmental and regulatory standards and to engage in crisis-mode upgrading of the physical infrastructure that is crucial to trade. Unless the industrial sector steps up and assumes responsibility for meeting world standards, there will be limits to what the government can do in terms of improving the country’s infrastructure.

Unless the industrial sector steps up and assumes responsibility for meeting world standards, there will be limits to what the government can do in terms of improving the country’s infrastructure.

The Trade Facilitation Agreement of the WTO—to which India is now a signatory and the cabinet has now approved—would appear to provide the guiding framework within which the required actions can be taken. India needs to work on a road map on a war footing that can bring its goods and services into conformity with the highest standards on technical barriers to trade; sanitary/phytosanitary rules; labeling, packaging, customs, clearance, and freight procedures; and the best or next-best environmental and labor regulations.

Undertaking these actions will require hard decisions, some adjustment costs, and even pain in the short and medium term. These actions are inescapable, however, if India’s manufacturing sector is to be given a fighting chance of competing in the global market place. Action is required on the part of both government and industry and related stakeholders.

Sobre o autor.

Ambassador Hardeep Singh Puri served as India’s permanent representative to the United Nations in Geneva and New York. He served as a member and chair of nine dispute settlement panels of the GATT and WTO between 1982 and 2007. Between 1988 and 1991, he was the coordinator of the Multilateral Trade Negotiations Project of the UN Development Program and UN Conference on Trade and Development, which advised developing countries in the Uruguay Round. During a career spanning thirty-nine years, he held senior positions in the Indian Ministry of External Affairs, including as secretary for economic relations, as well as important diplomatic posts in Brazil, Japan, Sri Lanka, and the United Kingdom.

2 For the population figure, see World Bank, “Population, Total,” World Development Indicators database, accessed January 2017, data. worldbank/indicator/SP. POP. TOTL; and for the economy figure, see World Bank, “India,” World Development Indicators database, accessed January 2017, worldbank/en/country/india.

3 Sabina Alkire et al., “Poverty in Rural and Urban Areas: Direct Comparisons Using the Global MPI 2014,” Oxford Poverty and Human Development Initiative, June 2014, ophi. uk/wp-content/uploads/Poverty-in-Rural-and-Urban-Areas-Direct-Comparisons-using-the-Global-MPI-2014.pdf.

10 World Bank, “Trade, Merchandise Exports (Current US$),” World Development Indicators database, accessed January 2017, data. worldbank/topic/trade? end=2014&locations=CN&start=2014.

12 “Discussion Paper: China, the Millennium Development Goals, and the Post-2015 Development Agenda,” United Nations Development Program China, February 2015, cn. undp/content/dam/china/docs/Publications/UNDP-CH_discussionpaper-MDGPost2015.pdf.

15 Biswajit Dhar, “Weaving a Success Story,” Hindustan Times , July 20, 2016.

17 D. Ravi Kanth, “What Happened at Nairobi and Why: Dismantling of Doha Development Agenda and India’s Role,” Economic and Political Weekly 51, no. 11 (March 2016): epw. in/journal/2016/11/insight/what-happened-nairobi-and-why. html.

18 Arvind Panagariya, “The WTO Trade Policy Review of India, 1998,” World Economy 22, no. 6 (August 1999): 799–824, columbia. edu/

20 “Prime Minister's Keynote Speech at 40th AGM of US India Business Council (USIBC),” press release, Press Information Bureau, Government of India, Prime Minister's Office, June 8, 2016, pib. nic. in/newsite/PrintRelease. aspx? relid=146054.

21 Since this paper was drafted, merchandise exports fell for a total of nineteen consecutive months until June 2016, when exports increased 1.3 percent; C. P. Chandrasekhar and Jayati Ghosh, “Understanding India’s Export Collapse,” Hindu Business Line , November 21, 2016, thehindubusinessline/opinion/columns/why-indias-exports-are-falling/article9370929.ece.

24 Office of the Press Secretary, “JOINT STATEMENT: The United States and India: Enduring Global Partners in the 21st Century,” press release, White House, June 7, 2016, whitehouse. gov/the-press-office/2016/06/07/joint-statement-united-states-and-india-enduring-global-partners-21st.

25 World Bank, “Gross Domestic Product, 2016,” World Development Indicators database, accessed February 2017, databank. worldbank/data/download/GDP. pdf.

26 “Trans-Pacific Partnership Agreement: Likely Impact on the U. S. Economy and on Specific Industry Sectors,” United States International Trade Commission, May 2016, usitc. gov/publications/332/pub4607.pdf; and Public Citizen, “New ITC Report Finds Disturbing Trends in U. S. Economy After Implementation of Free Trade Agreements,” June 30, 2016, citizen/documents/ITC-Report-FTAs. pdf.

27 C. Fred Bergsten, “India’s Rise: A Strategy for Trade-Led Growth,” Peterson Institute for International Economics, September 2015, piie/sites/default/files/publications/briefings/piieb15-4.pdf.

30 Bob Davis, "Free Trade Is Headed for More Hot Debate," Wall Street Journal , April 17, 1995, cited in Public Citizen, “NAFTA’s Broken Promises 1994-2013: Outcomes of the North American Free Trade Agreement,” 2013, citizen/documents/NAFTAs-Broken-Promises. pdf.

31 Harsha V. Singh and Anubhav Gupta, “India’s Future in Asia: The APEC Opportunity,” Asia Society Policy Institute, March 2016, asiasociety/files/ASPI_APEC_fullreport_online. pdf.

35 “Transatlantic Trade and Investment Partnership (T-TIP),” Office of the United States Trade Representative, ustr. gov/ttip.

38 The “codes” negotiated covered subsidies and countervailing measures, technical barriers to trade, import-licensing procedures, government procurement, customs valuation, antidumping, bovine meat, international dairy, trade in civil aircraft, and other issues.

What are the disadvantages of Free Trade ?

Despite many advantages, free trade policy has never been completely adopted by all the countries of the world. Particularly after the World War II, the policy was abandoned even by those who had previously adopted it. The following arguments are given against free trade policy.

Free trade policy is based on the assumption of laissez-faire or government non-inВ­tervention. Its success also requires the pre-condition of perfect competition. However, such conditions are unrealistic and do not exist in the actual world.

2. Non-Cooperation of Countries:

Free trade policy works smoothly if all the countries cooperate with each other and follow this policy. If some countries decide to gain more by imposing import restrictions, the system of free trade cannot work.

Free trade increases the economic dependence on other countries for certain essential products such as food, raw materials, etc. Such dependence proves harmful particularly during wartime.

Free trade leads to economic dependence and economic dependence leads to political slavery. For political freedom, economic independence is necessary. This requires abandonment of free trade.

Free trade and the resultant international specialisation lead to unbalanced development of national economy. Under this system, only those sectors are developed in which the country has a comparative advantage. Other sectors remain undeveloped. This results in lop-sided development.

Free trade may lead to cutthroat competition and dumping. Under dumping, goods arc sold at very cheap rates and even below their cost of production in order to capture the foreign markets.

Under free trade, injurious and harmful products may be produced and traded. Trade restrictions are necessary to check the import of such products.

8. International Monopolies:

Free trade may lead to international monopolies. It encourages the estabВ­lishment of multinational corporations. These corporations tend to acquire monopoly position and thus harm the interest of the local people.

9. Reduction in Welfare of Certain Groups:

While free trade tends to maximize world production of goods and services, it may simultaneously hurt the welfare of certain group in every country. Under free trade, the output of those commodities in which the country has comparative advantage tend to increase to meet the export demand, and the output of goods in which the country has comparative disadvantage contracts due to pressure from import competition. Thus, the real income of the groups engaged in the export industries will rise and real income of those engaged in the import competing industries will fall.

10. Harmful to Less Developed Countries:

Free trade is harmful for the less developed countries for the following reasons:

(i) Competition under free trade is unfair and unhealthy. The less developed countries find it difficult to compete with the economically advanced countries.

(ii) Under free trade, gains of trade are unequally distributed depending upon the level of development of different countries. The terms of trade are favourable for the developed countries, and unВ­favourable for the poor countries.

(iii) Less developed countries generally experience unfavourable balance of payments. The problem of un-favourable balance of payments cannot be solved under free trade policy.

(iv) Free trade policy adopted by the British government in India led to the destruction of Indian cottage and small scale industries.

(v) The less developed countries cannot protect their infant industries under the policy of free trade.

(vi) Free trade may endanger economic and political independence of the backward nations.

The Objectives of the Foreign Trade Policy of India.

Some of the objectives of foreign trade policy of India are as follows:

Trade propels economic growth and national development. The primary purpose is not the mere earning of foreign exchange, but the stimulation of greater economic activity. The foreign trade policy of India is based on two major objectives, they are as follows:

Image Courtesy : upload. wikimedia/wikipedia/commons/5/54/Ofiara_Abrahama1.jpg.

1) To double the percentage share of global merchandise trade within the next five years.

2) To act as an effective instrument of economic growth by giving a thrust to employment generation.

Agriculture and industry has shown remarkable resilience and dynamism in contributing to a healthy growth in exports. In the last five years the exports witnessed robust growth to reach a level of US$ 168 billion in 2008-09 from US$ 63 billion in 2003-04. Our share of global merchandise trade was 0.83% in 2003; it rose to 1.45% in 2008 as per WTO estimates. Our share of global commercial services export was 1.4% in 2003; it rose to 2.8% in 2008. India’s total share in goods and services trade was 0.92% in 2003; it increased to 1.64% in 2008. On the employment front, studies have suggested that nearly 14 million jobs were created directly or indirectly as a result of augmented exports in the last five years.

The short term objective of the policy is to arrest and reverse the declining trend of exports and to provide additional support especially to those sectors which have been hit badly by recession in the developed world. The policy is empowered with objective of achieving an annual export growth of 15% with an annual export target of US$ 200 billion by March 2011. In the remaining three years of this Foreign Trade Policy i. e. upto 2014, the country should be able to come back on the high export growth path of around 25% per annum. By 2014, policy expects to double India’s exports of goods and services.

The long term objective of policy for the Government is to double India’s share in global trade by 2020. In order to meet these objectives, the Government would follow a mix of policy measures including fiscal incentives, institutional changes, procedural rationalization, and enhanced market access across the world and diversification of export markets. Improvement in infrastructure related to exports; bringing down transaction costs, and providing full refund of all indirect taxes and levies, would be the three pillars, which will support us to achieve this target. Endeavour will be made to see that the Goods and Services Tax rebates all indirect taxes and levies on exports.

India’s Trade Policy Options.

As the US pushes the TPP and TTIP, India needs to do a better job choosing its trade deals.

The United States is presently attempting to bypass the World Trade Organization by pushing two highly ambitious trans-regional trade pacts: the Trans-Pacific Partnership and the Transatlantic Trade & Investment Partnership. Together, these two accords would encompass two thirds of world GDP and one third of world imports, and thus would nudge global trade further into preferential routes.

The U. S. and EU account for 30 percent of India’s merchandise exports. So where does that leave India? Should India follow the trend and aggressively pursue bilateralism to push its exports, or should it stick to multilateralism, especially after the (albeit modest) success of the recent WTO Bali Ministerial?

Studies show that complying with the complex rules of origin to get preferential tariff treatment under preferential trade agreements (PTAs) or free trade agreements (FTAs) add to trade transaction cost. That leads to low net realization from trade – and explains why trade routed through PTAs is so low. The Asian Development Bank estimates that trade through India’s PTAs ranges between 5 percent to 25 percent. A consensus-based multilateral trade regime under the WTO framework would thus work better for India.

Unfortunately, multilateral trade liberalization moves slowly – getting 159 WTO members to agree to a proposal is not easy. Besides, the growing indifference of large economies like China and the U. S. to the WTO leaves India with little option but to explore the bilateralism permitted by Article XXIV of GATT 1994 and Article V of GATS.

Moreover, WTO member countries (India being no exception) are often forced to sign specific PTAs/FTAs to protect their existing markets. For instance, the conclusion of the ASEAN-China FTA prompted the India-ASEAN FTA. Sometimes, geopolitical considerations may induce a country to join a particular trade agreement, such as the South Asian Free Trade Area (SAFTA).

India has joined the talks for a Regional Comprehensive Economic Partnership (RCEP) that would cover the Asia-Pacific, despite the nervousness India Inc. has about a free trade arrangement with China. In this context, it is pertinent to look at India’s experience in pushing exports through bilateral routes.

Of India’s FTAs, the most ambitious are those with the South Asian Association for Regional Cooperation (SAARC), ASEAN, Japan and Korea. There are PTAs such as those with Chile and Latin American trade bloc Mercosur. Experts argue that India’s existing trade pacts are shallow and suffer from limited coverage (the PTAs with Mercosur or Chile, for instance) or cover only trade in goods (e. g., SAFTA and the India-ASEAN accord). India’s trade with SAARC has been stymied by hostility between India and Pakistan.

Indeed, the trade pacts with ASEAN, Japan and Korea have done little to boost Indian exports. The country’s combined trade deficit with ASEAN, Japan and Korea has risen by 70 percent, from $16 billion in fiscal 2010 to $68 billion in fiscal 2013. It is obvious that concluding an agreement covering trade in goods while continually postponing the trade in services part (where India has a comparative advantage) under the India-ASEAN trade pact has not served India well.

Even when trade in services is included – as in India’s comprehensive economic partnership agreements (CEPAs) with Japan and Korea – there is greater emphasis on areas that are adversely affected by growing sentiment against outsourcing. Further, slow progress on the conclusion of mutual recognition agreements has limited the benefits from India’s deals with Japan and Korea.

The Way Forward.

Rushing into FTAs without creating a level playing field for domestic businesses will not help India’s exports. Here, one must consider the negative impact of the plurilateral Information Technology Agreement that India signed in 1997. Post accession, duties on final goods were removed (and this did help the growth of software sector), but those on components and parts were retained, which killed the growth of the indigenous electronics and computer hardware industry.

India’s manufacturing sector is troubled by cheap imports from China that are often subsidized covertly or overtly in the form of cheap loans, raw materials, land and power, as highlighted in successive U. S. Trade Representative compliance reports. Many of these trade distorting measures are the subject of WTO disputes. On the other hand, China uses non-tariff barriers to restrict access to its domestic markets. Thus, an FTA with China as envisaged under RCEP needs serious reconsideration.

This is not to argue that India cannot benefit from integrating with the Asian production network. However, unless the concerns of infrastructural bottlenecks are addressed, further trade opening with China under the RCEP, especially in manufactured goods, will lead to more imports (than exports) with implications for India’s current account balance. Of late, there is talk about rising wages in China, but it is important to consider India’s productivity differential with China, which depends on multiple factors, the extent of automation and skills upgrading being just two.

Even without an FTA, China accounted for more than 50 percent of India’s current account deficit in 2012-13. India has a narrow export basket with respect to China, with commodities such as iron ore, copper and cotton accounting for more than two thirds of its exports. Free trade with China will only exacerbate this.

However, this doesn’t mean India has nothing to gain from bilateral pacts. There are clear winners, such as the expansion of an India-Mercosur PTA into a full-fledged CEPA, or the deepening of trade relations with South Asia, especially Pakistan, Africa and CIS. A transit trade agreement (as part of the WTO Trade Facilitation Agreement) will boost intra-SAARC trade and help exports. Africa and the Commonwealth of Independent States (CIS) are the two fastest growing import markets. In 2012, imports grew by 11.3 percent in Africa and rose by 6.8 percent in the CIS; compare this to Asia (3.7 percent), North America (3.1 percent) and Europe (-1.9 percent). Going forward, these are the markets to explore.

A desirable trade strategy for India must therefore have a good mix of bilateralism and multilateralism. Given its comparative advantage in services and ever growing need for capital, India needs to target comprehensive trade pacts only, covering goods, services, and investment, among other areas. Whether we like it or not, foreign direct investment and multinational corporations remain the key source of export. So reversing policies in retail or any other sector that creates regulatory uncertainty would not be wise.

Further, with the U. S. trying to rewrite the future rules of trade through its giant trade pacts, India will have to upgrade its regulatory regime sooner rather than later, particularly with respect to intellectual property, labor and environmental standards, to safeguard its long-term commercial interests.

Ritesh Kumar Singh is Group Economist of a corporate house. The views here are his own.

Arguments for and Against Free Trade | Trade Policy.

Let us learn about Arguments for and Against Free Trade.

Arguments for Free Trade :

Eu. Advantages of Specialization:

Firstly, free trade secures all the advantages of international division of labour. Each country will specialize in the production of those goods in which it has a comparative advantage over its trading partners. This will lead to an optimum and efficient utilization of resources and, hence, economy in production.

ii. All-Round Prosperity:

Secondly, because of unrestricted trade, global output increases since specialization, efficiency, etc., make production large scale. Free trade enables countries to obtain goods at a cheaper price. This leads to a rise in the standard of living of people of the world. Thus, free trade leads to higher production, higher consumption and higher all-round international prosperity.

iii. Competitive Spirit:

Thirdly, free trade keeps the spirit of competition of the economy. As there exists the possibility of intense foreign competition under free trade, domestic producers do not want to lose their grounds. Competition enhances efficiency. Moreover, it tends to prevent domestic monopolies and free the consumers from exploitation.

iv. Accessibility of Domestically Produced Goods and Services:

Fourthly, free trade enables each country to get commodities which it cannot produce at all or can only produce inefficiently. Commodities and raw materials unavailable domestically can be procured through free movement even at a low price.

v. Greater International Cooperation:

Fifthly, free trade safeguards against discrimination. Under free trade, there - is no scope for cornering raw materials or commodities by any country. Free trade can thus promote international peace and stability through economic and political cooperation.

vi. Free from Interference:

Finally, free trade is free from bureaucratic inter­ferences. Bureaucracy and corruption are very much associated with unrestricted trade.

In brief, restricted trade prevents a nation from reaping the benefits of specialization, forces it to adopt less efficient production technues and forces consumes to pay higher prices for the production of protected industries.

Arguments against Free Trade :

Despite these virtues, several people justify trade restrictions.

Following arguments are often cited against free trade:

Eu. Advantageous not for LDCs:

Firstly, free trade may be advantageous to the advanced countries but not to the backward economies. Free trade has brought enough misery to the poor, less developed countries, if past experience is any guide. India was a classic example of colonial dependence of UK’s imperialistic power prior to 1947. Free trade principles have brought colonial imperialism in its wake.

ii. Destruction of Home Industries/Products:

Secondly, it may ruin domestic industries. Because of free trade, imported goods become available at a cheaper price. Thus, an unfair and cut-throat competition develops between domestic and foreign industries. In the process, domestic industries are wiped out. Indian handicrafts industries suffered tremendously dining the British regime.

iii. Inefficiency becomes Perpetual:

Free trade cannot bring all-round development of industries. Compara­tive cost principle states that a country specializes in the production of a few commodities. On the other hand, inefficient industries remain neglected. Thus, under free trade, an all-round development is ruled out.

iv. Danger of Overdependence:

Fourthly, free trade brings in the danger of dependence. A country may face economic depression if its international trading partner suffers from it.

The Great Depression that arose in 1929-30 in the US economy swept all over the world and all countries suffered badly even if their economies were not caught in the grip of the then Depression. Such overdependence following free trade also becomes catastrophic during war.

v. Penetration of Harmful Foreign Goods:

Finally, a country may have to change its consumption habits. Because of free trade, even harmful commodities (drugs, etc.,) enter the domestic market. To prevent such, restrictions on trade are required to be imposed.

In view of all these arguments against free trade, governments of less developed countries in the post-Second World War period were encouraged to resort to some kind of trade restrictions to safeguard national interest.

What are the disadvantages of Free Trade ?

Despite many advantages, free trade policy has never been completely adopted by all the countries of the world. Particularly after the World War II, the policy was abandoned even by those who had previously adopted it. The following arguments are given against free trade policy.

Free trade policy is based on the assumption of laissez-faire or government non-inВ­tervention. Its success also requires the pre-condition of perfect competition. However, such conditions are unrealistic and do not exist in the actual world.

2. Non-Cooperation of Countries:

Free trade policy works smoothly if all the countries cooperate with each other and follow this policy. If some countries decide to gain more by imposing import restrictions, the system of free trade cannot work.

Free trade increases the economic dependence on other countries for certain essential products such as food, raw materials, etc. Such dependence proves harmful particularly during wartime.

Free trade leads to economic dependence and economic dependence leads to political slavery. For political freedom, economic independence is necessary. This requires abandonment of free trade.

Free trade and the resultant international specialisation lead to unbalanced development of national economy. Under this system, only those sectors are developed in which the country has a comparative advantage. Other sectors remain undeveloped. This results in lop-sided development.

Free trade may lead to cutthroat competition and dumping. Under dumping, goods arc sold at very cheap rates and even below their cost of production in order to capture the foreign markets.

Under free trade, injurious and harmful products may be produced and traded. Trade restrictions are necessary to check the import of such products.

8. International Monopolies:

Free trade may lead to international monopolies. It encourages the estabВ­lishment of multinational corporations. These corporations tend to acquire monopoly position and thus harm the interest of the local people.

9. Reduction in Welfare of Certain Groups:

While free trade tends to maximize world production of goods and services, it may simultaneously hurt the welfare of certain group in every country. Under free trade, the output of those commodities in which the country has comparative advantage tend to increase to meet the export demand, and the output of goods in which the country has comparative disadvantage contracts due to pressure from import competition. Thus, the real income of the groups engaged in the export industries will rise and real income of those engaged in the import competing industries will fall.

10. Harmful to Less Developed Countries:

Free trade is harmful for the less developed countries for the following reasons:

(i) Competition under free trade is unfair and unhealthy. The less developed countries find it difficult to compete with the economically advanced countries.

(ii) Under free trade, gains of trade are unequally distributed depending upon the level of development of different countries. The terms of trade are favourable for the developed countries, and unВ­favourable for the poor countries.

(iii) Less developed countries generally experience unfavourable balance of payments. The problem of un-favourable balance of payments cannot be solved under free trade policy.

(iv) Free trade policy adopted by the British government in India led to the destruction of Indian cottage and small scale industries.

(v) The less developed countries cannot protect their infant industries under the policy of free trade.

(vi) Free trade may endanger economic and political independence of the backward nations.

Mercantilism.

The most important economic rationale for mercantilism in the sixteenth century was the consolidation of the regional power centers of the feudal era by large, competitive nation-states. Other contributing factors were the establishment of colonies outside Europe; the growth of European commerce and industry relative to agriculture; the increase in the volume and breadth of trade; and the increase in the use of metallic monetary systems, particularly gold and silver, relative to barter transactions.

During the mercantilist period, military conflict between nation-states was both more frequent and more extensive than at any other time in history. The armies and navies of the main protagonists were no longer temporary forces raised to address a specific threat or objective, but were full-time professional forces. Each government’s primary economic objective was to command a sufficient quantity of hard currency to support a military that would deter attacks by other countries and aid its own territorial expansion.

Most of the mercantilist policies were the outgrowth of the relationship between the governments of the nation-states and their mercantile classes. In exchange for paying levies and taxes to support the armies of the nation-states, the mercantile classes induced governments to enact policies that would protect their business interests against foreign competition .

These policies took many forms. Domestically, governments would provide capital to new industries, exempt new industries from guild rules and taxes, establish monopolies over local and colonial markets, and grant titles and pensions to successful producers. In trade policy the government assisted local industry by imposing tariffs, quotas, and prohibitions on imports of goods that competed with local manufacturers. Governments also prohibited the export of tools and capital equipment and the emigration of skilled labor that would allow foreign countries, and even the colonies of the home country, to compete in the production of manufactured goods. At the same time, diplomats encouraged foreign manufacturers to move to the diplomats’ own countries.

Shipping was particularly important during the mercantile period. With the growth of colonies and the shipment of gold from the New World into Spain and Portugal, control of the oceans was considered vital to national power. Because ships could be used for merchant or military purposes, the governments of the era developed strong merchant marines. In France, Jean-Baptiste Colbert, the minister of finance under Louis XIV from 1661 to 1683, increased port duties on foreign vessels entering French ports and provided bounties to French shipbuilders.

In England, the Navigation Act of 1651 prohibited foreign vessels from engaging in coastal trade in England and required that all goods imported from the continent of Europe be carried on either an English vessel or a vessel registered in the country of origin of the goods. Finally, all trade between England and its colonies had to be carried in either English or colonial vessels. The Staple Act of 1663 extended the Navigation Act by requiring that all colonial exports to Europe be landed through an English port before being re-exported to Europe. Navigation policies by France, England, and other powers were directed primarily against the Dutch, who dominated commercial marine activity in the sixteenth and seventeenth centuries.

During the mercantilist era it was often suggested, if not actually believed, that the principal benefit of foreign trade was the importation of gold and silver. According to this view the benefits to one nation were matched by costs to the other nations that exported gold and silver, and there were no net gains from trade. For nations almost constantly on the verge of war, draining one another of valuable gold and silver was thought to be almost as desirable as the direct benefits of trade. Adam Smith refuted the idea that the wealth of a nation is measured by the size of the treasury in his famous treatise The Wealth of Nations, a book considered to be the foundation of modern economic theory. Smith made a number of important criticisms of mercantilist doctrine. First, he demonstrated that trade, when freely initiated, benefits both parties. Second, he argued that specialization in production allows for economies of scale, which improves efficiency and growth. Finally, Smith argued that the collusive relationship between government and industry was harmful to the general population . While the mercantilist policies were designed to benefit the government and the commercial class, the doctrines of laissez-faire, or free markets, which originated with Smith, interpreted economic welfare in a far wider sense of encompassing the entire population.

While the publication of The Wealth of Nations is generally considered to mark the end of the mercantilist era, the laissez-faire doctrines of free-market economics also reflect a general disenchantment with the imperialist policies of nation-states. The Napoleonic Wars in Europe and the Revolutionary War in the United States heralded the end of the period of military confrontation in Europe and the mercantilist policies that supported it.

Despite these policies and the wars with which they were associated, the mercantilist period was one of generally rapid growth, particularly in England. This is partly because the governments were not very effective at enforcing the policies they espoused. While the government could prohibit imports, for example, it lacked the resources to stop the smuggling that the prohibition would create. In addition, the variety of new products that were created during the industrial revolution made it difficult to enforce the industrial policies that were associated with mercantilist doctrine.

By 1860 England had removed the last vestiges of the mercantile era. Industrial regulations, monopolies, and tariffs were abolished, and emigration and machinery exports were freed. In large part because of its free trade policies, England became the dominant economic power in Europe. England’s success as a manufacturing and financial power, coupled with the United States as an emerging agricultural powerhouse, led to the resumption of protectionist pressures in Europe and the arms race between Germany, France, and England that ultimately resulted in World War I.

Protectionism remained important in the interwar period. World War I had destroyed the international monetary system based on the gold standard . After the war, manipulation of the exchange rate was added to governments’ lists of trade weapons. A country could simultaneously lower the international prices of its exports and increase the local currency price of its imports by devaluing its currency against the currencies of its trading partners. This “competitive devaluation” was practiced by many countries during the Great Depression of the 1930s and led to a sharp reduction in world trade.

A number of factors led to the reemergence of mercantilist policies after World War II. The Great Depression created doubts about the efficacy and stability of free-market economies, and an emerging body of economic thought ranging from Keynesian countercyclical policies to Marxist centrally planned systems created a new role for governments in the control of economic affairs. In addition, the wartime partnership between government and industry in the United States created a relationship—the military-industrial complex, in Dwight D. Eisenhower’s words—that also encouraged activist government policies. In Europe, the shortage of dollars after the war induced governments to restrict imports and negotiate bilateral trading agreements to economize on scarce foreign exchange resources. These policies severely restricted the volume of intra-Europe trade and impeded the recovery process in Europe in the immediate postwar period.

The economic strength of the United States, however, provided the stability that permitted the world to emerge from the postwar chaos into a new era of prosperity and growth. The Marshall Plan provided American resources that overcame the most acute dollar shortages. The Bretton Woods agreement established a new system of relatively stable exchange rates that encouraged the free flow of goods and capital. Finally, the signing of the GATT (General Agreement on Tariffs and Trade) in 1947 marked the official recognition of the need to establish an international order of multilateral free trade.

The mercantilist era has passed. Modern economists accept Adam Smith’s insight that free trade leads to international specialization of labor and, usually, to greater economic well-being for all nations. But some mercantilist policies continue to exist. Indeed, the surge of protectionist sentiment that began with the oil crisis in the mid-1970s and expanded with the global recession of the early 1980s has led some economists to label the modern pro-export, anti-import attitude “neomercantilism.” Since the GATT went into effect in 1948, eight rounds of multilateral trade negotiations have resulted in a significant liberalization of trade in manufactured goods, the signing of the General Agreement on Trade in Services (GATS) in 1994, and the establishment of the World Trade Organization (WTO) to enforce the agreed-on rules of international trade . Yet numerous exceptions exist, giving rise to discriminatory antidumping actions, countervailing duties, and emergency safeguard measures when imports suddenly threaten to disrupt or “unfairly” compete with a domestic industry. Agricultural trade is still heavily protected by quotas, subsidies, and tariffs, and is a key topic on the agenda of the ninth (Doha) round of negotiations. And cabotage laws, such as the U. S. Jones Act, enacted in 1920 and successfully defended against liberalizing reform in the 1990s, are the modern counterpart of England’s Navigation Laws. The Jones Act requires all ships carrying cargo between U. S. ports to be U. S. built, owned, and documented.

Modern mercantilist practices arise from the same source as the mercantilist policies of the sixteenth through eighteenth centuries. Groups with political power use that power to secure government intervention to protect their interests while claiming to seek benefits for the nation as a whole. In their recent interpretation of historical mercantilism, Robert B. Ekelund and Robert D. Tollison (1997) focused on the privilege-seeking activities of monarchs and merchants. The mercantile regulations protected the privileged positions of monopolists and cartels , which in turn provided revenue to the monarch or state. According to this interpretation, the reason England was so prosperous during the mercantilist era was that mercantilism was not well enforced. Parliament and the common-law judges competed with the monarchy and royal courts to share in the monopoly or cartel profits created by mercantilist restrictions on trade. This made it less worthwhile to seek, and to enforce, mercantilist restrictions. Greater monarchical power and uncertain property rights in France and Spain, by contrast, were accompanied by slower growth and even stagnation during this period. And the various cabotage laws can be understood as an efficient tool to police the trading cartels. By this view, the establishment of the WTO will have a liberalizing effect if it succeeds in raising the costs or reducing the benefits of those seeking mercantilist profits through trade restrictions.

Of the false tenets of mercantilism that remain today, the most pernicious is the idea that imports reduce domestic employment. Labor unions have used this argument to justify protection from imports originating in low-wage countries, and there has been much political and media debate about the implications of offshoring of service sector jobs for national employment. Many opponents have claimed that offshoring of services puts U. S. jobs at risk. While it does threaten some U. S. jobs, it puts no jobs at risk in the aggregate, however, but simply causes a reallocation of jobs among industries. Another mercantilist view that persists today is that a current account deficit is bad. When a country runs a current account deficit, it is either borrowing from or selling assets to the rest of the world to finance expenditure on imports in excess of export revenue. However, even when this results in an increase of net foreign indebtedness, and associated future debtservicing requirements, it will promote economic wealth if the spending is for productive purposes that yield a greater return than is forgone on the assets exchanged to finance the spending. Many developing countries with high rates of return on capital have run current account deficits for extremely long periods while enjoying rapid growth and solvency. The United States was one of these for a large part of the nineteenth century, borrowing from English investors to build railroads (see international capital flows ). Furthermore, persistent surpluses may primarily reflect a lack of viable investment opportunities at home or a growing demand for money in a rapidly developing country, and not a “mercantile” accumulation of international reserves at the expense of the trading partners.

Sobre o autor.

Laura LaHaye is an adjunct professor at the Illinois Institute of Technology. She was a visiting scholar from 2004 to 2005 at the University of Illinois in Chicago and an economics professor there from 1981 to 1990. In 1981, she was a research economist with the General Agreement on Tariffs and Trade.