Efforts to forge free trade pact with 3 Latin American countries

By Our Special Correspondent

CHENNAI, MAY 14. The Union government is negotiating bilateral free trade agreements (FTA) with three Latin America Countries (LACs) - Brazil, Chile and Colombia. The first of these agreements is likely to be concluded in three months, according to Mr. D. K. Mittal, Joint Secretary (LAC) in the Commerce Ministry.

The countries have been chosen on the basis of their response to India's proposal for bilateral FTAs and the complementarity of their industrial structures with that of India, Mr. Mittal said.

Talking to presspersons on the occasion of a seminar on ``Business potential in Latin American countries'', organised by the ministry in association with the Confederation of Indian Industry (CII), at which Indian envoys to five LACs participated, Mr. Mittal said the bilateral agreements would initially provide for preferential tariffs, to be later converted to nil tariffs.

Based largely on the pattern of the India-Sri Lanka FTA, containing lists of commodities to be subjected to nil duty and concessional duty, along with a negative list (namely, exclusion for purposes of the agreement and not in the course of trade itself), the FTAs will help India tap the potential for both trade and investment cooperation, with these countries. The industrial and agricultural base of the three LACs was such that there was no competition but only the possibility of cooperation on the basis of complementarity.

Also, setting up of Indian ventures or joint ventures in the three LACs would help Indian manufacturers take advantage of FTAs/PTAs in which the three countries were members, like the MERCOSUR, the Andean FTA and CARICOM. Sectors in which India was particularly competitive, like textiles, pharmaceuticals and chemicals, should take advantage of the FTAs. Also, the FTAs would facilitate the process of getting standards approval for drugs, Mr. Mittal said.

Mr. Mittal pointed out that more than 70 per cent of world trade was accounted for by trade between countries which were members of one or more preferential/free trade agreements and bilateral agreements reached by some of them with developed countries, though in principle FTAs and PTAs ran counter to the MFN (most- favoured-nation) principle of the World Trade Organisation (WTO), even if recognised by the WTO when not concluded between developed countries. India's FTA with the three LACs would come ahead of the formation of the Free Trade Agreement Of the Americas, now being negotiated by the U.S. and Canada with democratic members of the Organisation of American States (OAS).

The Joint Secretary said the growth in India's merchandise exports to the LACs as a whole in 2000-01 was as high as 43 per cent, compared to 19 per cent in the overall exports. In the current year so far, the export growth to the LAC region was still higher, at 45 per cent. China, which had started expansion of trade relations with the LAC region only recently, had already made big headway in the past few years.

Mr. Vittal said Brazil had last year passed a law on generic drugs, which kept these outside the purview of patents. Indian companies, which had built up expertise in manufacturing, could take advantage of this law. In the case of other drugs, Indian companies could take to manufacture/marketing of patent-expired drugs and also drugs developed by them.

Earlier, Indian Ambassadors to Argentina, Brazi, Chile, Colombia and Venezuela made presentations at the seminar on the economic profile of and trade and investment potential in the respective countries.

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