Businesses need to be aware of rules for modern FTAs

Businesses need to be aware of the regulatory barriers in climate change, labour protection, gender inclusivity and e-commerce, areas which were not part of India’s earlier free trade agreements (FTAs).It also said in a report that anticipating the impact of the upcoming FTAs on the supply chains can help businesses review sourcing strategies to design resilient supply chains.

Modern FTAs like the EU-Japan. Economic Partnership Agreement and the Canada-EU Comprehensive Economic and and. Trade Agreement (CETA)India has inked trade pacts with the UAE, Australia and Mauritius recently, and is in talks with the UK, EU, Canada and Israel.

In the past, India was not keen to include aspects such as climate change, labour protection, gender inclusivity and digital trade or e-commerce in FTAs, it said.

“However, the country has demonstrated a willingness to negotiate these issues in modern FTAs. Thus, businesses need to be aware of regulatory barriers in these areas for the modern FTAs,” said the PwC report titled ‘Business imperatives of modern FTAs’.

Definition of a free trade agreement

A free trade agreement (FTA) is an international agreement which removes or reduces tariff and non-tariff barriers to trade and investment between partner countries.

Trade and investment barriers can make it more difficult and costly to trade or invest overseas. By removing or reducing them, FTAs can make it easier for businesses to export, import and invest. They can also benefit consumers by providing a more diverse and affordable range of imported products.

FTAs may be multilateral, plurilateral, regional or bilateral:

multilateral agreements are agreed by all members of the World Trade Organisation (WTO)
plurilateral or regional agreements are agreed by subsets of WTO members
bilateral agreements primarily relate to the liberalisation and regulation of trade and investment between the 2 signatories to the agreement

FTAs differ from customs unions. Parties to an FTA maintain independence to set their own tariffs on imports from nonparties.

How many FTAs does the UK have?

As an independent trading nation, the UK now has over 70 trade agreements in place. Recent trade agreements that have come into force include: Singapore Digital Economy Agreement. Japan Comprehensive Economic Partnership Agreement.