Week 10 Blog: US Manufacturing Industry Pushes India for Free Trade

An article that I have found interesting in respects to the trade relationship between India and the US was published in the Economic Times this month. It is titled “US manufacturing industry pushes India for free trade” and it draws light on the ‘brick’ (manufacturing) side of the so called ‘brick and click’ paradigm. It is well known that a lot of the companies that have recently outsourced to India have been ‘click’ companies in that they are associated with the telemarketing and IT industries attracted by English-speaking, educated and cheap workers. With India’s emerging economy becoming the next target on the radars of large MNCs it is important to look at how a free trade agreement will affect employment relations in the manufacturing industry as well as the IT industry.

With Narendra Modi being elected as the new Prime Minister of India, US manufacturers have been provided with the opportunity to effectively work towards establishing a free trade agreement, which will ultimately create a ‘level playing field’ for foreign companies looking to invest in India. This is being packaged by advertising that it will result in significant boosts to economic growth and prosperity in both countries, as well as evening the balance of the trade relationship which has largely been in the US’s favour.

If we seek to understand the potential impact that a free trade agreement could have on employment relations in India it may be beneficial to look towards the North American Free Trade Agreement (NAFTA) and the outcomes that Mexico has been experienced since its introduction. Some areas that NAFTA has had positive effects in are as follows:

-       Trade among NAFTA countries has more than tripled

-       Job growth in NAFTA countries has been strong

-       The North American Agreement on Labour Cooperation (NAALC) has;

o   Improved working conditions and living standards

o   Protects, enhances & enforces basic workers rights

o   Raised public profile of major labour rights issues

-       NAFTA countries maintain their own independence and legal frameworks

In comparing a potential free trade agreement between the US and India with that of the NAFTA we can see that if it is implemented correctly the benefits to both countries, and the world economy as a whole, will be extremely significant.  It is important to note that, although there are a vast number of benefits resulting from the NAFTA, there is still a large degree of exploitation taking place in regards to workers rights. I believe that the growing support, in the form of new social movements and fair-trade for example, is the tool that will need to be used in order to influence any free trade agreement in the direction of improving and enforcing workers rights in India from the top-down. It may be the case also where there is an opportunity to cut costs of production through the removal of barriers to trade rather than through the continuing degradation of Indian workers rights.

REFERENCES

Economic Times 2014, US Manufacturing Industry Pushes India for Free Trade. Available from: <http://articles.economictimes.indiatimes.com/2014-09-10/news/53770373_1_linda-dempsey-facilitation-bilateral-trade-and-investment>. [1^st October 2014]