India's foreign trade is inclusive of both exports and imports, working both
ways, i.e. to and from India. Administered by the Ministry of Commerce and
Industry, foreign trade accounts for a significant percentage in India's GDP.
Presently, exportation of more than 7500 commodities in accordance to
importation of more than 6000 commodities from countries demarcate the
significant rise of total export and import structure of India. With the advent
of new times, the figure of import/export is expected to rise significantly.
past five year performance of India displays a significant increase in the
country's GDP, steadily promoting India's trade relations with other countries.
The Make in India¯ campaign initiated by the Modi Government attracted several
multinational companies to set up their institutions in India. Microsoft has
already set up its base in India along with other multinational companies like
Google, Oracle etc. Apple Inc, the American multinational company has decided to
set up its own manufacturing unit in India. Analyzing the data and statistics,
it is expected that India's foreign trade will rise significantly over the next
five years. Presently, India ranks among the top ten (7th) countries in terms of
What is NAFTA?
Signed by three countries namely the United States, Canada and Mexico, NAFTA
deals with a trilateral trade agreement in North America.
Established in 1st January 1994 by the then President of US, Ronald Regaon, the
agreement objectified towards:
- Elimination of trade barriers thereby facilitating the cross-border
- Promotion of conditions for competitions competed through fair means.
- Expansion of substantial investment possibilities.
- Provision of adequate protection of interest vis-Ć -vis enforcement of
intellectual property rights.
- Creation of procedures effective enough for implementation of this
- Incorporation of a framework so as to facilitate future trilateral,
regional and multilateral collaboration.
NAFTA: Industrial Outcomes
The incorporation of NAFTA resulted in significant changes throughout the
industrial sector, the results of which are discussed below,
Textile and Apparel Industries:-
Negation of duties on textile and
apparel goods over a 10 year period, decided in the North America meeting,
facilitated duty free trade between the three countries.
Negation of Mexico's restrictive auto decree alongside
negation of all US, Mexico and Canada tariffs. Basic requirements were included
in the agreement to enact a monopoly in trade services. The requirements were
instituted to 62.5 percent for autos, light trucks, engines, transmissions,
suspensions etc, in contrast to 60 percent for other vehicles and automotive
Separate bilateral undertakings are adopted on cross-border
agricultural trade. Canada and Mexico entered into an agreement while U.S. and
Canada had a separate agreement. However, the FTA provisions related to U.S. and
Canada continued to exist.
NAFTA made significant changes in investment
policies, uplifted basic protection for investors thereby providing an effective
mechanism related to settlement of disputes, guiding the investors and providing
them with rights to settle disputes with the country.
Dispute Settlement Procedures:-
The FTA provisions which existed between
the U.S. and Canada contain the measures for prevention and settlement of
disputes. A structure for arbitration resolved disputes including initial
consultations. If needed, one could approach the NAFTA Trade Commission, or go
through arbitral panel proceedings.
Intellectual property in relation to NAFTA
The first ever international trade agreement to include objections for
protection of intellectual property rights, the NAFTA revolutionized the world
of trading. The logic pertaining to incorporation of intellectual property
provisions within an agreement of trade ensures in itself the enforcement of law
consistent with access to markets and non-discrimination of the free trade
principles. Chapter 17 of the NAFTA lays down the provisions related to
intellectual property rights thereby referring to copyright and other rights
related to trademark and patent, etc. The provisions contain various safeguards
including adequate and effective measures for protection and enforcement of
intellectual property rights. All the parties affiliated to NAFTA are bound to
implement such laws so as to prevent unauthorized duplication of materialistic
work. Additionally, such countries affiliated under NAFTA are entailed to
protect the interests of another NAFTA country. In other words, such countries
are restrained from providing to another, a better title for protection of such
rights. Obligations included in Chapter 17 lays down a sequence of obligations,
included in order to protect rights of the parties. The trademark provisions
incorporated within restrict third parties from application of identical designs
and structures thereby providing a minimum standard of protection against
replication of signs and designs, uplifting public interest.
NAFTA: The Indian Scenario
The globalization process seldom follows capital flows. The contribution of
liberalization and deregulation in the past has helped strongly to cascade the
FDI flows. However, the extent of such was inconsistent throughout the
territory. For instance, an area lacking in technology got a significant boost
in the technological sector due to the advent of foreign firms thereby causing a
rise in employment. There is a term prevalent in Mexico called Maquiladora¯
which signifies foreign owned firms. Such firms boost the employment and
resources, thereby increasing productivity in the industrial sector and
facilitating the society with economic needs. Similar scenario exists in India
whereby foreign companies set up their bases in India.
Economic Assistance from NAFTA to India
Being direct in nature, such assistance is provided on country to country basis
making its source tied. Only specified donor countries are applicable to spend
such resources irrespective of price and market conditions. The principle of
multilateral assistance is to this date the most efficient embodiment of
economic assistance. Loans and grants are the principal forms of such
assistance. Keshav C. Sharma, an imminent author quoted, Loans are that part of
the economic assistance which has to be serviced with the interest payments
either in local currency or in the foreign currency.¯ USAID (US Agency for
International Development) deals with channelization of economic assistance,
while CIDA (Canadian International Development Agency) deals with the Canadian
structure of assistance provided to developing countries.
Post independence, the scenario underwent a significant transformation whereby
such assistance was not required, making India economically independent. The P.L.
- 480 (Public Law 480) program, set up to curb the problem of hunger and
malnutrition, administered such aid during the initial phase of independence,
specifically in food sector. Comprising of three titles, each one of them
objectified their significance providing agricultural assistance in different
societal strata. Provided in Title One is the selling of agricultural
commodities, basis of which is in long term credit. Title Two deal with donation
of agricultural commodities while Title Three engulfs itself with donations
based on government to government basis thereby supporting the humanitarian
aspect of the civilization. Agency for International Aid (AID) looks after the
two titles viz, two and three.
Quantum of Assistance
All G-8 countries are entitled to provide assistance, bilateral in nature. Such
countries include USA, UK, Japan, Germany, France, Canada etc. Another situation
exists whereby some countries are predefined not to provide assistance in
governmental levels to another country. However, provision of assistance does
not get restricted there, thereby enabling the countries to provide assistance
not in the governmental level but in relation to development of schools and
universities etc. Collaboration of such universities further assimilates the
growth of the educational sector, providing a significant boost in the
educational structure and providing further employment opportunities abroad.
India was authorized an assistance amount of Rs.4,84,761.2 crore till the year
2011 out of which about 84 percent was used in economical aspects of the
country. NAFTA provided assistance to India at an amount of Rs. 7,030.5 crore
out of which Rs. 5875.20 crore was appropriated in developmental aspects.
Combining both the stats from overall assistance provided to India and the
assistance as provided by NAFTA, it is further examined that the rate of
appropriation of the amount by NAFTA was significantly higher than the overall
assistance received for economical aspects.
In 1985, the statistics of trade between India and USA amounted to $ 1641.9 in
terms of export and $ 2294.7 in terms of import, the figures of which remained
similar till the year 1987. 1988 onwards, India observed a significant growth in
the import/ export ratio which continued to increase throughout the years. In
2018, India's total export amounted to an aggregate of $ 33,120.1 while
maintaining its import at an aggregate of $ 54,407.5 which showed a significant
increase than the ratio observed in 2017. The stats show an aggregate of $
25,688.9 in terms of export while maintaining its import at an aggregate of $
48,602.9. The present statistics in 2019 show an export in the amount of $
5,337.9 and an import of $ 9,536.3.
The current scenario of NAFTA took a significant turn when the US President
Donald Trump announced to re-negotiate and even excoriate a few of those
treaties held to be disadvantageous to the American economy. Calling it the
worst trade deal ever made¯, Trump proceeded with the re-negotiation of the
NAFTA and has been involved in an arm-twisting brawl with the other two
countries visually, Mexico and Canada. Trump in one of his twitter posts
quoted, NAFTA, which is under renegotiation right now, has been a bad deal for
Massive relocation of companies and jobs, Tariffs on Steel and Aluminum
will only come off if new and fair NAFTA agreement is signed.¯ For at least
half a century, the trade agreement succeeded in maintaining a good relationship
with two of its neighboring states. Moreover, if such re-negotiation takes place
India is likely to get affected significantly, creating an order of chaos
between the countries, thereby affecting the diplomatic relationship of the two
states. It is for this particular reason, that the Congress repelled Trump's
atrocious decisions in fear of depleting the relationship between Canada, USA
Significance of this agreement lies in its application in interlinking trade
relations between countries along with maintenance of good relations between the
countries. Mexico and Canada, both being neighboring states, the significance of
such relationship stands atop all.
- Sheveta Sehgal, The Evolution of NAFTA: An Experience in Regionalism,
- Michael J. Boskin, NAFTA at 20: The North American Free Trade Agreement's
Achievements and Challenges, (2014)
- William A. Orme (Jr.), Understanding NAFTA: Meixco Free Trade, and the New
North America, (1996).
- Mary E. Burifisher, Sherman Robinson, Karen Thierfelder, The Impact of Nafta
on the United States, (2001).
- Lokeshwarri SK, All You Wanted to Know About Nafta Negotiations, (2018)
- David Bacon, The Children of Nafta, (2004).
- Joseph Fitz, The North American Free Trade Agreement (NAFTA), (1993).
- Rene Cabral Torres, Andre Varella Mollick, Intra-Industry Trade Effects on
Mexican Manufacturing Productivity before and after NAFTA, (2018).
- Vivek Rajbahadur Singh, Trends and Flow of Foreign Direct Investment: An
Indian Perspective, (2016).
- USA authorized Rs. 5221.6 crore and Canada authorized Rs. 1808.9 crore in
terms of loans and grants.
- NAFTA Job Claims; Truth in Statistics?: Hearing Before the Committee on
Governmental Affairs, United States Senate, One Hundred Third Congress,
First Session, (2018).
- Alan Rappeport and Jim Tankersley, Trump Berates Canada and Threatens Car
Tariffs as NAFTA Talks Falter, The New York Times, (26 September, 2018).
- Edward G. Hinkelman, Glossary of International Trade, (2010).