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free trade agreements (FTA) is being heard a lot these days. Now in this regard, Global Trade Research Initiative (GTRI), a research and strategy consulting company, has said in a report that it is important to be aware of some myths related to Free Trade Agreements (FTA). According to the report, it is currently believed that FTAs lead to faster growth in exports. Domestic manufacturing gets a boost. However, this is not correct. These are all myths: FTAs weaken the World Trade Organization, countries around the world are desperate to do FTAs and these agreements increase investment, it is wrong to believe that most of the world’s trade is done through FTA route, but the reality is that 20 Less than 10 percent of world trade takes place through this route.
No increase in exports from FTA
The report said that there is no truth in the fact that countries around the world are keen to enter into FTAs, but in reality these agreements are more interested mainly in East-Asian countries which have reduced or eliminated excise duty. have make. According to it, “The major industrialized countries or regions enter into FTAs in a very selective manner. For example, the US has not made any such agreement with important economies like the European Union, China, Japan, ASEAN or India. The EU has 41 trade agreements, but most of them are with smaller countries and suppliers of raw materials.” 83-85 percent of world trade takes place outside these agreements and according to WTO rules. A myth is that FTAs lead to increased exports.
Need to make a strategy away from FTA
According to the report, since less than 20 per cent of world trade is taking place on concessional excise duty, India will need additional strategies to promote 80 per cent trade away from this route. The report said, “Merely signing of FTA does not guarantee growth in exports. The potential for increased exports through FTAs is reduced when the import duty in the partner country is low. From this point of view, FTA will not be particularly beneficial to increase exports in Singapore or Hong Kong as there is no import duty there. Trade agreements with Malaysia, Japan, Australia, New Zealand and Brunei will only benefit select product groups as most imports from these countries are duty-free.
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