Negotiating exclusions in Developing country FTAs

This post is with reference to an article I wrote in 2014 that appeared in the Foreign Trade Review published by the Indian Institute of Foreign Trade, New Delhi.

Motivation for this article derives from my personal engagement in pruning of lists on exceptions during a research assignment in New Delhi back in 2010. The article has further benefited from discussions with policy-makers at the Ministry of Commerce and Industry in India; with insights from academics at the University of Sussex plus colleagues at the United Nations ARTNeT.  

I discuss the issue of negotiating exceptions to trade agreements with a specific focus on developing countries. Why is this topic important?

Most developing countries have embraced preferential trade agreements (PTAs) as the route to trade liberalization. These agreements fall under Most Favoured Nation (MFN) exemptions of the General Agreement on Tariffs and Trade (GATT). The North–South PTAs are notified to the WTO under GATT Article XXIV and the South–South PTAs under the enabling clause. Both of these, however, provide for exclusions of certain sectors from tariff liberalization and allocate longer phase-in periods for some. This exception potentially helps resolve any conflicts on protection for politically sensitive industries.

However, there exists no predetermined method of expansion of liberalization content during phase-in periods. It is therefore necessary to compare both methods of negotiating exclusions, as each is perceived as a new policy for stakeholders having corresponding legal, administrative and economic implications. This article first examines the pros and cons of both approaches and then moves to a discussion on the specific case of India under the agreement on the South Asian Free Trade Area.

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