Survey for CECA with developed nations, not FTAs

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New Delhi: In the backdrop of the recent global financial crisis and shrinking market, Indian government’s Economic Survey has said that while efforts to promote exports were needed, there was a need to guard against protectionist measures originating from the country’s trading partners.

Quoting a G-20 group of countries position paper it said “we also need to desist from any protectionist tendencies and proceed on the reform path.”

The Survey suggested evolving clear-cut policy for beneficial Comprehensive Economic Cooperation Agreements (CECAs) even with some developed countries instead of just Free Trade Agreements (FTAs) or Preferential Trade Agreements (PTAs) which should be well integrated with our economic and trade policy reforms and the blueprint for possible changes due to WTO negotiations.

It also suggested the need for checking the proliferation of Special Economic Zones (SEZs).

As many as 568 SEZs have been accorded formal approval and 318 SEZs have been notified till May 13, 2009.

Besides short-term relief measures and stimulus packages to boost country’s exports, the Survey suggested some fundamental policy changes.

For boosting merchandise trade, the Survey said that the government should continue with the policy for reducing customs and excise duty to make industry and exports competitive, streamline existing export promotion schemes, give special attention to the development of export infrastructure along with rationalization of port service charges based on services rendered by ports in tune with the competing countries, weed out unnecessary customs duty exemptions, rationalize tax structure including specific duties in a calibrated manner taking into account the specific duty levels in trading partner countries.

In the services sector a roadmap of specific policies should be drawn up not only to overcome the impact of the current global crisis, but also to accelerate the growth of the economy and total exports as this sector has been showing a steady and promising performance with relatively lesser support compared to the merchandise sector.

According to the Survey a more systematic approach, the Survey a more systematic approach could increase our dividends from this sector manifold.

In particular, one major area where reforms can help in sustaining export is domestic regulations. Domestic regulations perform the role of tariffs in regulating services trade.

The Survey called for streamlining licensing requirements and procedures, qualification needs and procedures, technical standards and regulatory transparency in services sector.