Trade has been an important part of human Civilization for thousands of years. Today international trade is a vital component of the global economy, With countries around the world trading goods and services, and investments with each other. However, International Trade can be complex and has a variety of trade barriers such as tariffs quotas, and Technical regulations. These barriers can limit trade flows and restrict business opportunities for companies operating in these markets that is why there is something called the policy of Free Trade Agreement FTA.
As you have heard Olaf Shows made a statement that he wants to strengthen trade cooperation between the European Union and India and that is why we are both going to work towards making a deal between our two countries. He is going to personally get involved in getting this free trade agreement signed between the European Union and India by the End of this year with this you can imagine how important Free trade agreements are. But an important thing to understand here is that both countries have to agree on the terms and conditions. India has been negotiating a free trade agreement with European Union since 2007. It is not happened till now because both countries have disagreements over various issues and those disagreements are typical with respect to the terms and conditions.
It is the European Union that has more terms and conditions. In any kind of business deal always one party wants to get ahead of the others so whenever any western country thinks of doing free trade agreement with India they always make secure their own interest first. But then today India has a strong foreign policy. Now because of this Russia-Ukraine conflict, the European market is witnessing an energy crisis and a food crisis. And that is preciously the reason why the European Union today is in a hurry in signing an FDA.
Why Are Countries Interesting In Pursuing FTA with India?
It is not just the Europen Union even Canada, Britain, Australia, United States they all been discussing the possibility of a free trade agreement with India for several years and currently, many of them have also reached the negotiation level. Now eventually agreements will be made it is just a matter of meeting the terms and conditions. FTAs are often negotiated through trade Summits and other international negotiations where participating countries work together to identify the area of common interest. And negotiate the terms of the agreement. Now, these negotiations can be complex and often involves difficult offs between competing interests such as the need for the domestic industry while promoting greater trade flows.
Downsides Of FTA
One of the biggest downfalls of a free trade agreement is the potential for job losses. When countries open up their market to each other some industries may find it difficult to compete with their counterpart in other countries. Particularly for those with lower labor costs, this can lead to job losses in those industries which can be particularly devastating for workers who lack the skills needed to transition to other industries. Another downside of free trade agreements is the unequal distribution of benefits. Some sectors and groups May from increased market access and new business opportunities and other may face more competition and lose out. For example, small farmers in developing countries may find it difficult to compete with subsidized agricultural imports from developed countries. which can lead to decoding incomes and loss of livelihoods. And free trade agreements can also have environmental impacts. Increase economical activity associated with free trade can lead to an increase in carbon emission pollution and deforestation. In some cases, countries may lower environmental standards in order to attract foreign investment which creates a vicious cycle. Which will eventually lead to a race to the bottom in terms of environmental standards.
Upsides Of FTA
One the biggest of free trade agreements is increasing trade by eliminating or reducing tariffs and other trade barriers countries can trade more goods and services with each other which can lead to increased business opportunities for companies in both countries as well as more choices and lower prices for consumers. Another benefit of free trade agreement is increased efficiency when countries specialize in producing the goods and services that they are most efficient at producing they can trade with other countries to obtain the goods and services they need this can lead to more efficient use of resources and higher productivity. Basically outsourcing is the word. now free trade agreement can also promote corporation between two countries by working together to create rules and standards for trade counties can build trust and cooperation which can help to prevent conflicts and promote peace. finally, free trade agreements can promote sustainability by including environmental and labor standards in free trade agreements countries can encourage more sustainable practices which can lead to more sustainable use of natural resources while free agreement can have both benefits and downsides but then it is important to recognize that they can be a powerful tool for promoting economic growth and maintaining international relations.
Why Are Countries Interesting In Pursuing FTA With India?
There are several reasons why countries may be interested in pursuing a free trade agreement with India. Number one is Market size. India is the second most populist country in the world with a population of over 1.3 billion people. This large market presents a significant opportunity for countries looking to expand their export and increase their revenue. The growing middle class in India is also becoming increasingly affluent which is driving demand for a wide range of goods and services. Second economic growth. India is one of the fastest-growing economies in the world with a GDP expected to reach 5 trillion dollars by 2025. it presents an attractive destination for foreign investors by entering into a free trade agreement with India countries can access this growing market and benefit from the opportunities presented by the country’s economic growth.
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