India-UK trade agreement: What is on the agenda?

India will soon commence the next round of talks over a free trade agreement (FTA) with the United Kingdom in the coming months. On the agenda is securing a patent regime against evergreening by pharma companies, seeking easier work visas as well as access to Indian movies in the region under the proposed FTA.

The move comes amid concerns that the inclusion of issues such as labour and environment may not be in the interest of the country, in the long run, reported TOI on Friday.

In a free trade agreement, two countries or regions either significantly reduce or eliminate customs duties on a maximum number of goods traded between them. Besides, they also ease norms to promote trade and investments.

Some civil society groups have argued the patent regime may be eased which will enable drug companies to get fresh protection by tweaking the composition.
Talks were reportedly derailed due to UK home minister Suella Braverman‘s comments over Indians overstaying their visas. Official sources said that they are not chasing a deadline as they want to secure a good deal. But, given the progress made, the agreement may be finalised over four-five months.

From the UK side, reduction in import duty on scotch and automobiles as also bringing labour within the ambit of the proposed treaty are focus areas.

FTAs may hamper exports

Taking binding commitments on new issues like environment, labour and sustainability in the proposed FTA, being negotiated by India, may hamper the country’s exports in the future, according to a report by Global Trade Research Initiative.

India’s already “weak” FTA outcomes may worsen if it takes obligations in the new issues, the report — FTAs: Fabulous, Futile, or Flawed? An evaluation of India’s FTAs with ASEAN, Japan and South Korea — said.

It added that like many developing countries, India has an evolving regulatory framework on most new issues.

“International commitments must be taken only after the domestic regulatory framework is in place. And both must be in sync. New non-trade issues may serve as non-trade barriers and hamper our exports in the future,” GTRI (Global Trade Research Initiative) report said.

Developed regions like European Union and the UK are pushing to include these new issues in the proposed trade pact with India.

The report said that in the FTAs under negotiations, India is discussing many new subjects not directly related to trade.

The subjects have been included at the request of developed countries and that include environment, labour, intellectual property rights, data governance, digital trade, gender, SMEs, anti-corruption, good regulatory practices, and sustainable food systems.

On the existing trade agreements of India, it said, the increase in trade deficit pattern as noticed in the FTAs with ASEAN (Association of South east Asain Nations), Japan and South Korea will continue in the new agreements.

“The key reason would remain higher import duties in India compared to new FTA partners,” it said, adding that less than 20 per cent of world trade happens at concessional customs duties and because of that India needs additional strategies to promote its trade happening outside of such agreements.

“India’s weak export performance with FTA partners should not surprise us. It happened because of high tariffs in India and significantly lower tariffs in its FTA partners,” it said.

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