View: Nothing wrong with reviewing the economic rationale and fallout of India’s varied trade agreements


Plus, RTAs mess up the duty structure. Ideally, duties should be lowest for raw materials, higher for intermediates and highest for finished goods, with a complication of figuring out which item is what.

Synopsis

Can one unambiguously conclude that all RTAs lead to trade-investment creation? No. The answer is empiricaland depends on specifics of the agreement: how substantial is the agreement? How deep is its coverage? Arelarge chunks of the trade basket left out because of negative lists?

By Bibek Debroy & Aditya SinhaThere have been reports that GoI intends to review India’s regional trade agreements (RTAs). Signing RTAs or opting out of them isn’t a binary. This is akin to the old trade diversion-creation and investment diversion-creation argument in vogue since the days of economist Jacob Viner in the 1950s.Can one unambiguously conclude that all RTAs lead to trade-investment creation? No. The answer is empiricaland

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