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What are the benefits of an FTA?

April 26, 2017Benefits FTA

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What are the benefits of an FTA?

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Under an India China FTA, for example, instead of importing steel from Europe, a producer would import it from China. This does not help the Indian economy. Morevoer, as long as China does not satisfy the entire Indian demand for imported steel, the price of steel in India does not fall. “Rules of origin” on which FTAs are based mean that only steel produced in China can be imported under preferential tariffs – there will be zero tariff only when there is a minimum percentage of value added in China.