Early Harvest agreements – UPSC Prelims

Early Harvest agreements:
  • Early harvest scheme is a precursor to a free trade agreement (FTA) between two trading partners.
  • This is to help the two trading countries to identify certain products for tariff liberalisation pending the conclusion of FTA negotiation.
  • It is primarily a confidence building measure between two trading partners
  • Challenges associated with the Early Harvest agreements:
    • They can result in delaying a comprehensive FTA. For instance, with Thailand, India has signed a restricted trade agreement in 2004 but has been unable to convert this into an FTA. Similar case with Sri Lanka, where India was not able to conclude an agreement on services and investments.
    • Early harvest agreements can be challenged in WTO, as only comprehensive FTA’s are exempt from WTO rules. Article XXIV.8(b) of GATT exempts only those deals which cover substantially all the trade between two countries.
    • Expert notes that early harvest deals reduce the incentive from one side towards a full FTA.

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