WHAT WE WILL BE LEARNING IN THIS VIDEO

What’s the China-Maldives Free trade agreement all about?

Its impact on India

The strategic importance of Maldives

India – Maldives relations

WHAT IS AN FTA AND WHAT ARE THE BENEFITS?

FTAs are designed to reduce the barriers to trade between two or more

countries, which are in place to help protect local markets and industries.

Lowering trade barriers helps industries access new markets, boosting

their reach and the number of people they can sell their products to.

FTAs are also ultimately designed to benefit consumers. In theory,

increased competition means more products on the shelves and lower

prices.

MALDIVES AND CHINA SIGNED A FREE TRADE AGREEMENT (FTA).

Maldives rushed through the much-criticised Free Trade Agreement with China

in the Parliament

This is also Maldives’s first FTA with any country. Now that the agreement has

been signed between China and Maldives

This development is important to India as Maldives does not have an FTA with

the country.

Needless to say, the FTA agreement between Maldives and China will have a

bearing on India and set the tone for its future diplomatic ties with Male.

The principal opposition party, the Maldivian Democratic Party (MDP),

said that it was “deeply concerned over sudden and rushed Free Trade

Agreement (FTA) with China, without any disclosure of details to the public or

to the MPs”.

WHAT IS THE FTA BETWEEN MALDIVES AND CHINA?

The FTA agreement, China will exempt its Maldivian imports,

mostly fisheries products, from taxes. Maldives, on its part, would

waive tariffs on its Chinese imports.

As per the Maldives Presidential office’s statement, the FTA will

“enable exemption of duties on fisheries products exported to

the world’s largest consumer market”.

INDIA’S CONCERN

It’s interesting to note that the statement didn’t mention India

when talking about FTA with other countries.

“Maldivian government has extended invitations to establish free

trade agreements with countries including Japan, the United

States of America, the United Kingdom and countries of the

European Union,” read the statement.

In July 2015, the Maldives passed the amendment to the constitution

allowing foreign ownership of freehold land for the first time just a day

after the legislation was tabled in parliament. India had been taken by

surprise at the swiftness of the passage of the bill and became alarmed

that it would could lead to increased Chinese military presence in the

Maldives.

After India expressed its concerns, Yameen assured Indian Prime Minister

Narendra Modi that the Indian Ocean region will remain de-militarised.

WHY IS IT IMPORTANT TO INDIA?

Besides, on the sidelines of the FTA agreement, President Abdulla Yameen

also pledged support for China’s 21st century Maritime Silk Road (MSR)

India has already expressed concerns over this road, especially because of

its implications in the Indian Ocean Region (ICR).

The Maritime Silk Road (MSR) is part of China’s ambitious Belt and Road

Initiative (BRI), which includes the China Pakistan Economic Corridor

(CPEC), Bangladesh, China, India and Myanmar (BCIM) corridor, along

with the MSR.

ROAD AHEAD

The opposition further stated that the approval with just 30 votes in the

85-member house was not legally tenable.

“The MDP notes that the Attorney General of the Maldives had advised

corresponding legislation for the Agreement to be legally binding. The

Constitution requires 43 attending to pass legislation on this, and the

Government does not have the required votes. The FTA cannot be

implemented until the legislation is passed,” the party said.