Bilateral pacts to go beyond trade

In a major policy shift, the government has decided to convert all preferential/free trade agreements PFA/FTA into comprehensive economic cooperation agreements Ceca. This reverses the UPA government8217;s bid in recent maonths to embrace bilateralism aggressively.

The decision seems to be aimed at mollifying the World Trade Organisation WTO, whose Director-General Supachai Panitchpakdi cautioned India against goiong the whole hog with PFAs/FTAs at the World Economic Forum8217;s summit in New Delhi on Tuesday. 8220;Cecas might be a more saleable proposition in multilateral fora,8221; is how an official phrased it.

PTAs/FTAs usually involve structured reduction in tariffs between two countries. Cecas would cover preferential relaxation of FDI rules vis-a-vis the partner country, tax holidays on investment and income, easing of visa restrictions etc. Trade in services too would come under the purview of a Ceca.

An official said the arrangement would make the 8216;distance and content8217; of such pacts open-ended and lead to greater engagement between the two countries. Progressive reorientation of the pact8217;s components would be possible, whereas bilaterals have a limited mandate, he said.