Trade agreements as a pillar for inclusive economic growth

Today, all countries root to share mutual strengths and overcome mutual weaknesses through combined efforts. As a result, countries are coming closer through various trade agreements like regional free trade agreements, bilateral free trade agreement even through cross-regional free trade agreements. The free trade area occurs when two or more nations establish preferential trade liberalization policies by eliminating or substantially reducing trade barriers among themselves. A customs union surpasses free trade liberalization policies by establishing a common external tariff for non-members. A common market goes even further. Members eliminate restrictions on the movement of labor and capital among each other. Additionally, members harmonize national policies to some degree, including monetary, fiscal and social policies, and concede a degree of political and legal control to a single ruling authority. In view of this, the agreements have a major impact on trade and investment worldwide. In fact, they are responsible for shaping business relationships among companies across the globe. In order to succeed in the international environment, small business exporters need to be aware of the impact trade agreements have had and will have on their businesses. For instance, recently President Kagame held fruitful bilateral talks with Indian Prime Minister Modi as well as the Minister for Gujarat State, Pradipsinh Jadeja. President Kagame and Prime Minister Modi, during the bi-annual Vibrant Gujarat Summit is an investment promotion platform. The outcome of this meeting demonstrated growing ties between Rwanda and India. Some of these were India’s announcement to open a resident Mission in Kigali, the launch of direct flights to Mumbai by RwandAir in a few months’ time and other wide range of issues which demonstrated increasing engagements of the two countries as business partners. These commitments do not only create the condition for closer relations among nations but also provide a common platform to act in a united fashion in other multilateral platforms like, multilateral trade negotiation in the World Trade Organisation (WTO) and even in the global political arena. It brings benefits to the nation and its people; exchange of knowledge, facilities and other expertise are some of the key benefits brought about by bilateral agreements. Consequently, it promotes economic integration and builds shared approaches to trade and investment, including the adoption of common Rules of Origin and through broader acceptance of product standards. Other benefits include elimination of behind-the-border barriers that impede the flow of goods and services between parties, encourage investment, enhance cooperation, and can also address other issues, such as intellectual property, e-commerce and government procurement. Red tape such as import license requirements that prevent small companies from exporting cease to exist when countries have common agreements. Large companies often either have the resources to hire consultants or the existing in-house expertise to work through these sometimes hidden barriers. By eliminating confusing red tape through trade agreements, small companies are also put on a more level playing field and are better positioned to grow internationally. On the other hand, smaller companies are often able to respond faster to market changes than large firms. This can give them an edge as the pace of global change quickens. Importantly, as more “niche” market opportunities present themselves — which may be considered insignificant in size for large multinationals — small firms will likely find many of them considerably profitable and well worth the pursuit. In the case of Rwanda and India, our domestic companies are now well positioned to sell their products to India and vice versa. As it has been in the past, a bigger number of students will be capable of flying to study in India through our own national carrier, and at the same time a host of multinational Indian companies opening their doors within the country. Oscar Kimanuka is a communications specialist and a part-time lecturer at both the Senior Command and Staff College and the Consultative Forum for Political Parties.

Opinions

Trade agreements as a pillar for inclusive economic growth