Countries negotiating free trade agreements (FTAs) need to keep in mind eight “myths” which surround these pacts, like they lead to accelerated increase in exports and promote domestic manufacturing, according to a report by think-tank GTRI.
The report by Global Trade Research Initiative (GTRI) claims to dispel these ‘myths’, including that FTAs weaken the WTO (World Trade Organisation), countries are rushing to do FTAs, and these pacts promote investment and lower prices.
It is “erroneously” believed that most world trade happens through the FTA route, but in reality, it is less than 20 per cent, said the report titled ‘FTAs: Fabulous, Futile, or Flawed?’.
It is also not true that countries world over are rushing to do FTAs and in fact these pacts are “enthusiastically” embraced mainly by east Asian economies or countries that have lowered their customs duties close to zero.
“Major industrial countries/regions do FTAs selectively. The USA has no FTA with significant economies like the European Union, China, Japan, ASEAN (Association of Southeast Asian Nations), or India.