Country longitude: the path of free trade

Context

Free trade between different countries is the economic need of today's global period and therefore the obstacles in the path of free trade should be eradicated, from which all countries can benefit from economic growth. According to Finance Minister Arun Jaitley, due to rising concern about tariff war and the obstacles raised in front of other countries to protect the interests of its industries throughout the world, the global economy is likely to be damaged. It is necessary for the wider interests of all countries to reduce the barriers to trade. No country can make all things or at least provide the best services for consumers seeking the best quality at a lower cost. Looking at this, free trade arrangements are needed. Growing free trade will benefit not only the global economy but economies of all countries.

• Two British economists Adam Smith and David Ricardo promoted the idea of ​​free trade through the economic concept of comparative advantage. Comparative advantage occurs when one country can produce better quality goods than others.
• Nations can import these products from other countries who have limited amounts of these products.
• Free trade also affects the use of economic resources to produce consumer goods.

What is the Free Trade and Free Trade Agreement?

• Free trade is a policy created between two or more countries that allows unlimited exports or imports of goods or services among partner countries.
• Trade agreements occur when two or more nations agree on the terms of trade among themselves. These agreements determine tariffs and surcharges imposed on import and export. All trade agreements affect international trade.
• To make such an agreement, the countries or countries of the countries do not need to be within the purview of the WTO, so if they are interrupted by the rules of the WTO, then they can move forward with the help of the FTA.
• Ends free trade tariffs and makes corporation more competitive in overseas markets.
• FTA usually covers goods (e.g., agriculture or industrial products) or services (such as banking, construction, trading, etc.) of services.
• The FTA can also cover other areas such as intellectual property rights (IPR), investment, government procurement and competitive policy etc.

How is the FTA different from the WTO?

• Behavior with Most Preferred Countries or Most Favored Nations Treatment (MFNT) is one of the fundamental principles of the WTO. The FTA presents an exception to this principle.
• The Free Trade Agreement and the World Trade Organization are different in their structure, as well as their scope is different.
• The 'binding charges' are set within the WTO, whereas these charges are either directly deleted or reduced to zero percent within the Free Trade Agreement. This makes the business even faster.
• The WTO provides some special provisions, safety measures and flexibility to developing and less developed countries, while the FTA does not allow special provisions or safety measures for developing countries and less developed countries.
• The Free Trade Agreement also extends into areas where WTO is in limited scope, whereas the intellectual property fixed by the FTA, the WTO, goes far beyond business standards and the provisions of TRIPS PLUS Demands that give more than trips.
• The Free Trade Agreement covers those areas within the scope that were kept out of the WTO, such as investment, government procurement and liberalization of e-commerce.

Why the FTA?

• The elimination of tariffs and some non-tariff barriers makes it easier for FTA partners to reach each other's markets.
• Exporters like the FTA for multilateral trade liberalization because they have the preferential advantage over competitors of non-FTA member countries. For example, in ASEAN case, ASEAN has an FTA with India, but not with Canada.
• ASEAN's custom duty on leather shoes is 20% but this duty becomes zero under the FTA with India.
• There is a possibility of increase in foreign investment outside the FTA, while the FTAs ​​promote free trade and investment flows.
• FTA encourages business productivity and innovation. This gives regional integration a boost. 
• The FTA can help developing countries, and the business environment is dynamic.

Obstruction in the way of the FTA

• US President Donald Trump has increased imported on imported steel and aluminum products from India. On the other hand, India has talked about importing high-capacity motorcycles and almonds imported from the United States by importing it. From this episode it is clear that the principle of free trade is no longer effective.
• The statement of the Finance Minister points to obstacles coming across the border trade. The main obstacles in free trade are tariff barriers i.e. import duty.
• Second, non-tariff barriers i.e. how many items will be banned in the trade. The tariff will be zero, but some conditions will be imposed.
• Other countries of the world, along with the United States were moving towards eliminating these obstacles, but after 2016, the US started raising tariffs, which is the world's largest economy. It is important that India too does business with the United States on a large scale.
• America began to impose tariff barriers with different countries. He also started import duty with China because China's trade is more than the US.
• America has imposed import duty on two commodities - steel and aluminum with India. America does not export as much as it imports.
• The mention of trade war in the context of the US and China is coming up repeatedly, which is not well for global economic development.

What has changed in global business?

• There is a decline in the system of the WTO, since the independence of free trade and trade since its inception in 1994 has not been done as fast as it should have been.
• The so-called developed countries like America, Europe, France, Germania, Japan were pressurizing the developing countries to open their path. But when the developing country agreed to open its path, then these developed countries closed their path. That is, the process of reversal of the liberalization began.
• There is a big question about the existence of the WTO in the context of trade war. Sometimes the developed countries used to talk about free trade arrangements to provide services to developing countries, but now the developed countries are turning away from this and now the developing countries are speaking the same thing.
• There is a talk of intense nationalism in all major countries. Like America's First policy, France, Germany, Japan, etc. are developing on the nation's policy of nation first. These countries do not want to open everything for all other countries.
• Developed countries were given a lot of flexibility for free trade for developing countries. Now these developing countries are taking Uran or say that their doors are shutting down.

Is the relevance of FTA decreasing?

• America was a supporter of free trade in the 1990s. The United States had implemented the World Trade Treaty with other countries and established the World Trade Organization (WTO). Today, today Donald Trump calls the WTO harmful.
• At the time, new technologies were being invented in America. Like Microsoft invented window software. To make this software, Microsoft cost almost one dollar per software, while at the time it was selling it for ten dollars.
• Similarly, the Cisco system was being sent to the world by creating a computer by Internet router, IBM and Hewlett Packard.
• Monsanto was being exported by making genetically modified seeds like BT Cotton. The US was making huge profits, so for that time, free trade was at that time a double profit deal.
• On the other hand, from the developing countries like India, cheap clothes and toys were being received by American consumers. That is why the United States lobbied free trade at that time and played a vital role in building the WTO.
• Today, new products such as window software have ceased to exist in the US. On the Internet, China has established its interference. A large number of modern computers are being made in China and Korea.
• As a result, US exports are under pressure, while imports are on the rise. American workers are being harmed by the increase in imports, while the reduction in export of hi-tech products is causing loss of American workers.
• To overcome this problem, the US has increased imported steel from India and imported on all imported products from China. America's thinking is that goods from India and China will not come, then that goods will be produced in America.
• This will increase the employment opportunities for citizens, but on the other hand, by increasing the imports as per India's response, the exports will also be reduced in the US.
• There are two aspects of free trade. The first is foreign investment, the idea behind that was that with the free trade, US multinationals will invest in India and set up new companies, which will boost foreign investment in India with high technology.
• Today, due to the lack of high technology in the US, its investment in India has reduced on the basis of foreign investment.
• The second aspect is that even if we adopt globalization, our exports will decrease as the free trade is being abandoned by the United States.

What is the option?

• Becoming back from free trade, adopting a policy of protectionism is more relevant today. It is more important to encourage domestic investment in place of foreign investment.
• India's entrepreneurs today are more interested in setting up factories in foreign countries instead of investing in India.
• Instead of acquiring new technologies through indigenous investment, India should now strive to invent new technologies itself and expedite research programs in its universities and other institutes. By doing so, we will be able to move on the basis of domestic investment and domestic technologies.
• Conflicts in international business and problems are increasing. Obviously, there has been a break on the moment of joining and enriching the world with free trade.

Conclusion

The US is now struggling in the field of free trade, with many countries in which it is failing. President Trump has adopted the strategy of dismantling the WTO to fulfill its intention. The rules of the WTO are that in view of national security, any country can import it on any particular goods. US using this provision enhanced by importing steel produced in India. Just as the US President Donald Trump has started using the protectionist policies and trade duties as weapons, the fear of the end of free trade in the world economy is more It looks