Articles by Biswajit Dhar

The United States and China had signed Phase One of the Economic and Trade Agreement, the process to end the nearly two-year-old trade war between the world’s two largest economies. The agreement reads like a charter of demands that the US has made on China in several key areas. A critical analysis of the agreement and the implications for the two countries are presented.

India withdrew from the largest ever free trade agreement, the Regional Comprehensive Economic Partnership after a multitude of stakeholders, including farmers’ organisations, trade unions, and industry associations, spoke in one voice on the adverse implications of the agreement. India has three FTAs with the members of Association of Southeast Asian Nations, Korea and Japan, which were expected to increase India’s exports. Exports did not increase as Indian enterprises lack competitiveness, but imports from the partner countries expanded, leading to the haemorrhaging of domestic manufacturing. Future participation in FTAs must be conditioned on improving the competitiveness of domestic entities.

With the formation of the World Trade Organization in 1995, the United States farm subsidies had moved towards income support, reducing spending on price support measures. The explicit reason was that the WTO had held that the latter forms were more market distorting and had thus put limits on their spending. The new Farm Act 2014 has changed the orientation of farm spending in the opposite direction. Pricebased measures are back in focus, and the US seems less concerned about breaching its WTO limits.

The full implications of the establishment of the United States-led Trans-Pacific Partnership Agreement need to be considered carefully by the global community. The proposed agreement could act as a trigger for the setting of a "new normal" in economic integration between countries, whose terms would be significantly tougher as compared to those existing under the multilaterally negotiated rules of the World Trade Organization.

India's current account deficit has widened in recent years primarily because of the steep increase in the deficit on the merchandise trade account. While imports have grown with the surge in gold imports, export performance has been indifferent despite the fact that India has formalised several free trade agreements. Policymakers will have to move away from a reliance on ad hoc solutions and find ways to address the infi rmities in the domestic economy.