The purpose of the paper is to explore the economic repercussions of potential India–USA free trade agreement (FTA) on the trade of agricultural commodities at HS 2-digit level.
The analysis is undertaken by assuming tariff reduction in a phased manner using the World Integrated Trade Solutions (WITS)-SMART partial equilibrium model to identify the trade creation and trade diversion effects.
Overall results show that both the trading partners gain from the proposed FTA. Trade creation dominates over trade diversion in India's analysis.
An FTA between India and the USA could be an essential step toward more liberal trade regimes and provide enormous economic benefits to both countries. Government of both the countries should support deeper integration. This will create more job opportunities and generate prosperity in both economies.
There are numerous studies conducted on evaluating the impact of FTAs ratified between countries. But there are limited studies which evaluate the impact of the proposed India–USA FTA on the economies of both trading partners specifically on the agriculture sector.
