Led more by political concerns than economic rationale

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: With the coming into being of WTO, it was expected that Preferential Trading Agreements (PTAs) or Free Trade Agreements (FTAs) would loose their sheen. But the number of such agreements has risen exponentially since the birth of WTO. The foremost reason given is that in the WTO, differences are so huge that rapid liberalisation becomes difficult to achieve while decision-making is faster in the smaller groupings of nations.

Economists tend to be deeply suspicious of the alleged benefits of PTAs. One reason is that discriminatory preferences built into any PTA are antithetical to the principle of non-discrimination, which underpins the vision of a liberal world trading order. Besides, rules of origin in PTAs pose a big problem. The result is a “spaghetti bowl” of rules, arbitrary definitions of which product comes from where, and a multiplicity of tariffs depending on source, say the noted US- based economist duo: Dr Jagdish Bhagwati and Arvind Panagariya.

Trade experts also warn that these agreements will weaken the bargaining power of poor countries and fragment their coalitions, as they abandon legitimate objections to the inclusion of extraneous issues in trade treaties like labour standards. Having abandoned these objections in a bilateral deal with the powerful nations, how would they pursue them in WTO negotiations?

With the NDA riding to power on the plank of faster liberalisation, India jumped into the FTA bandwagon with vengeance. The first FTA was signed with Sri Lanka in 1999. Possibilities were explored in all directions and five years down the line, India seems to be in a ‘FTA signing frenzy’. Framework agreements have already been signed with Asean, Safta, Thailand and the GCC Arab states. Discussions are in advance stage for agreements with Mercosur (comprising Argentina, Brazil, Paraguay and Uruguay). India is gunning for more: Bimstec (Bangladesh, India, Myanmar, Sri Lanka and Thailand), Singapore and so on.