Prime minister Manmohan Singh indicated on Monday that he was open to negotiating a free-trade agreement (FTA) with the US, on the lines of a pact inked in August with the 10-member Association of Southeast Asian Nations.
“I don’t mind exploring the possibility of an FTA with the US,” Singh told the Council of Foreign Relations. According to Indian trade officials, an FTA with the US could ease barriers for US firms to invest in India’s fast-growing economy and provide greater access and visas for Indian professionals to America’s services industries.
India is forging free-trade or comprehensive economic agreements with key trade partners, while pushing for a global deal under the World Trade Organisation. It recently signed an FTA with Asean in Bangkok, for trade in goods, after six years of intense negotiations. The pact does not cover software and information technology. But both parties to the FTA expect a $10 billion boost in trade.
Aware of the gruelling negotiations FTAs demand, Singh observed that reaching a deal in the Doha round of global trade negotiations would eliminate the need for an FTA with the US.
“The multilateral trading system itself should evolve in a direction where there is a reduced role for trade distortions represented by tariff and non-tariff barriers,” said Singh.
Singh arrived in Washington on Sunday, on a four-day state visit, to boost economic ties. Two-way trade, at $5 billion in 1990, reached $14 billion in 2000 and rose to nearly $50 billion last year.
