"In terms of defensive interests, any modalities negotiated would provide for exclusion of sensitive products by GSTP members thus enabling India to calibrate the impacts of GSTP liberalisation on Indian agriculture and industry.”
Apart from tariffs, rules including rules of origin, would be negotiated. Also, as part of a rolling agenda for negotiations, it is hoped that GSTP can address the front-stage trade liberalisation and facilitation issue of non-tariff barriers. It could also deal with services liberalisation in which India would have a major interest, Ms. Puri pointed out.
South-South trade, she said was important for India in its trade and development policy as more than half, 53 %, of India's merchandise exports are currently bound to other developing countries.
While India's total merchandise trade with the developed countries has grown at an annually averaged rate of 12 % between 1995 and 2005, its South-South trade has grown faster, at 17 %.
India's foreign trade has risen by over 270 % from 1995 to 2005. While trade with developed countries has grown by 176 % over this period, growth in trade with the South has gone up almost twice as fast at 323 %.
Further, South-South trade allows India to diversify away from a reliance on saturated northern markets for its exports. It also provides new and additional markets with a demographic dividend, growth in demand and increased purchasing power.
The South is vital for India's food and energy security, and access to natural resources including minerals and metals for powering India's 9% annual growth rate as well as its infrastructure and industry.
With India's own diversification and move into a manufacturing hub and services powerhouse, the role for complementarities with the South is increased manifold, the UNCTAD official said.
Alluding to the critical challenge of the successful conclusion of the ongoing GSTP negotiations, Dr. Amit Mitra, Secretary General, FICCI noted that an UNCTAD study estimates that a 50% tariff reduction among GSTP members would result in a trade gain of US$ 15 to 18 billion.
Dr. Mitra said South-South trade should not be viewed as a substitute for North-South trade, but as a supplementary tool to achieve trade liberalization through a rule-based multilateral trading system.
However, to realize the full potential of South-South trade, Dr. Mitra underlined the need to address the current weakness of trade infrastructure and trade-related finance.
Trade-supporting institutions, a network of export credit agencies, more efficient payment and credit arrangements, widespread banking network are essential for expanding South-South trade, he emphasized.
Federation of Indian Chambers of Commerce and Industry
marketing@alchempro.com
