The biggest trade agreement after Brexit is delayed because British Prime Minister resign?

Overnight, the plate changed.

The day before British Prime Minister Johnson's resignation, India's Minister of Commerce Piyush Goyal also stated to the media that India and the United Kingdom are expected to reach a comprehensive trade agreement by October. At present, the negotiators have been finalized near Half of the agreement, this will be the largest trade agreement since Brexit.

However, after Johnson resigned, news from India became cautious. According to Indian media reports, a senior Indian government official said that Britain's political turmoil may postpone the negotiations between Britain and India to reach this ambitious free trade agreement (FTA).

Cui Fan, a professor at the School of International Economics and Trade at the University of International Economics and Trade and the director of the Research Department of the China WTO Research Association of China, told the First Financial Reporter that in the past 30 years, its economic growth rate has been accelerated, which has led to international enterprises to India Office to Office of India Office Enterprises start factories, but the main purpose of this business behavior is to be more convenient to sell in India. Some Internet companies to start companies in India have also seen the huge consumer market in India, but India has not regarded India as a real export platform Essence

Originally planned to complete negotiations at the emissions festival

India and the United Kingdom began to conduct free trade negotiations on January 13, 2022. They had conducted four rounds of negotiations on this FTA, and the latest negotiations were on June 24. The original plan was to conduct the fifth round of negotiations in New Delhi this month.

Due to the smooth progress of the negotiations before, Johnson and Indian Prime Minister Modi agreed on April 22 to complete the negotiations with the lamp Festival on October 24 this year.

In the idea, the FTA will cover 90%of the tariffs on the trade in Britain and India, and will double the British and European trade within 8 years, from $ 16 billion to $ 32 billion.

It is reported that this FTA intends to improve the market access problem of British whiskey and Indian textiles, and also touches the sensitive fields of both sides. For example, the United Kingdom may open up opportunities to open up jobs from students and technical workers from India.

India is one of the countries with the most consumer whiskey in the world. Most of the whiskey is also brewed in India. Scottish whiskeys have a share of only 2%in India.

In this case, the prospect of this FTA splashed the Scottish brewing industry. At present, the Scottish whiskey sold in India was levied 150%. According to the calculation of the Scottish Whiskey Association, if tariffs can be exempted, Scotch whiskeys can increase £ 1 billion to India in the next five years.

At the same time, Britain hopes to use the FTA to enter the Indian manufacturing industry, and this is not easy. As a exchange, Britain may relax the work visa to Indian citizens. According to British data, in 2021, 60,000 Indians have received visas for technical workers in the UK, accounting for 2/3 of the total number of technical workers issued by the UK. However, it should be pointed out that the work visa and immigration issues were originally one of the main reasons for Brexit demands.

"As long as there is a free trade agreement, there will always be a lot of concessions." Goyal commented on this, "the challenge is there. But there is no challenge that cannot be overcome."

However, Johnson's sudden resignation changed the current situation. A senior Indian official said that Johnson's resignation and a large number of ministerial officials within the British government resigned, which caused the final period of the end of the bilateral FTA negotiations to deviate from the original track.

According to statistics from the First Financial Reporter, at least 54 ministerial officials have submitted their resignations, including important cabinet members of the British Minister of Finance, John Galen, and others.

Why did India start to be keen to FTA again

After Brexit, the United Kingdom sought a free trade agreement with Asian countries, and India also recently resumed the embrace of bilateral free trade negotiations, and signed a trade agreement with Australia and the UAE.

For Britain, India's market potential is full of attractiveness. According to British information, India may become the third largest economy in the world in 2050, of which production groups and consumption capacity will expand.

In an interview, Goyal said that his goal was to help India grow from the current current $ 3 trillion to a $ 3 billion economy.

"The world acknowledges that no other countries in the world can provide markets like India. It provides a market for people who are eager for better life quality." He said, "This market may increase by 10 times in the next 30 years. And developed countries may be twice or three times after 30 years. "

Why is India be so enthusiastic about FTA? Cui Fan told the First Financial Reporter that Modi did really want to integrate India's internal production, improve India's manufacturing industry and global level, and also want to participate in globalization.

However, India's overall foreign trade volume is still a deficit, and even after signing the above -mentioned free trade agreement, its deficit is still expanding, which is related to the lack of the development of India's domestic manufacturing industry in the short term. Cui Fan said: "Taking the processing assembly of manufacturing as an example, India has not yet formed a complete system."

According to data released by the Indian Ministry of Commerce on July 4, driven by oil, coal and gold imports, the trade deficit of India in June expanded to a record of US $ 25.63 billion in June, US $ 24.3 billion in May, and June 2021 in June 2021 It is $ 9.61 billion.

According to data released by the Indian Reserve Bank (RBI) at the end of June, from 2021 to 2022, the frequent account deficit (CAD) accounted for 1.2%of the GDP (GDP), while the surplus of 2020-12 was 0.9%.The $ 102.2 billion a year ago expanded to $ 189.5 billion."India has not yet reached the time when it can be called 'manufacturing take -off'. The biggest problem is that when it really wants to take off in the real manufacturing industry, the opportunity is already small." Cui Fan believes that at the same time, due to the endogenous nature of India in India, the endogenous nature of India is in China.Although its domestic market is large, it cannot be unified from both consumer markets and labor markets.

Furthermore, when talking about a free trade agreement, if you want to talk about labor or environmental standards, this is a double -edged sword for India.Cui Fan said that on the one hand, India's current level is difficult to accept, and on the other hand, if it can be implemented, it can also increase India's manufacturing industry a lot.

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