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- Why in news?
- Last month, the department of commerce (DoC) suspended negotiations with
the European Union on the proposed Broad-based Trade and Investment
Agreement.
- WHY: This came on the heels of EU regulators banning the sale of
some generic drugs on grounds of data manipulation.
- CRTICISM:
- The DoC’s decision
has invited three criticisms.
- First, that there was no need to take such
an extreme measure; negotiations could (and should) have continued.
- Second, that India’s action suggests trade negotiators are unaware of
global trends and the prospective emergence of large trading blocs like
the Trans-Pacific Partnership (TPP); instead, India should be actively
seeking opportunities for bilateral and regional trading arrangements
that expand its commercial outreach.
- Finally, that India’s approach to
trade negotiations ought not to be restricted to free-trade agreements
(FTAs); it should embrace sanitary and phytosanitary (SPS) as well as
technical barriers to trade (TBT) measures and trade in services.
- In the past, there have been numerous instances of agri-product
consignments being destroyed or the entire EU market being effectively
closed. Even in such trying circumstances, dialogue continued.
- Commercial diplomacy means remaining engaged.
- Negotiations cannot and should not be conducted under the glare of the media.
- Since India suspended the negotiations, it will be for India to seek to resume them — and that will come at a cost.
- Weakened WTO:
- With a weakened WTO, it is vitally important to be alive to global trends and newly emerging trading blocs.
- WTO has been enfeebled by the developed countries.
- The US will never
allow the Doha Round to be completed; witness how it has stalled it from
2008 on.
- The WTO will, therefore, be confined to salvaging the remains
of Doha, arrangements for bits and pieces — that is, those that do not
materially impact global trade flows or correct major distortions.
- Hence, India must start looking at alternatives, such as regional and
bilateral trading blocs.
- This has been conscious policy since 2004.
- Diversification of India's Commercial Diplomacy:
- It is certainly true that in the initial stages trading arrangements
were confined to trade in goods, or FTAs.
- However, for over a decade,
India has worked on
- comprehensive economic partnership agreements
(CEPAs) that embrace
- trade in goods,
- trade in services,
- investment,
- SPS,
TBT,
- competition,
- mutual recognition agreements (MRAs) and
- a number of
other subjects.
- It is, therefore, plain wrong to aver that India has
confined its approach. These add-on topics are technical and replete
with legal pitfalls. It is these complexities that have delayed
culmination of many CEPAs.
- PROBLEMS (with trade negotiations of India):
- First, and a favourite among politicians, is the often unfounded but
firmly held belief that the partner needs India more than India needs
it.
- Second is the erroneous notion that India must win on all fronts. Negotiations are about give and take.
- Third, the give and take has to be
viewed from a pan-economy perspective, not an individual ministry’s.
And, yet, this is precisely what we do. Hence, the innate reluctance of
ministries to cede anything until they have something in exchange.
- Fourth, negotiators need bargaining chips; if India wishes to access
developed country markets in services, it has to open up its markets in
services. And it fails on the latter.
- Fifth, the counterpart’s
negotiating team strength is five to 10 times that of India’s. Our
negotiators are amongst the ablest in the world, but they are seriously
short-handed.
- Last, occasional hiccups prompt a disproportionate outcry
motivated by narrow interests. Playing to the domestic gallery yields
meagre and short-term returns. But that is invariably what we do.
- SOLUTIONS, WAY AHEAD:
- a clear-cut policy announcement, if only to assure prospective trade
partners. Else, there will always be the lingering doubt: Is India
really serious?
- First, credible commitment to preferential trading arrangements has to
be demonstrated, and only the PM, who carries conviction, can do this.
- Second, CEPAs have political economy dimensions and some subserve larger
strategic objectives.
- This is why the Trade and Economic Relations
Committee (TERC) was established.
- Chaired by the PM, the TERC comprised
the
- finance minister,
- external affairs minister,
- agriculture minister,
- commerce minister and
- others who could take an overall view on the
balance that needed to be stuck through negotiations and the political
red lines that could not be crossed.
- This was useful to set goals (and
limits) for trade negotiators. The TERC should be reactivated.
- Third, in 2010, a proposal was mooted to significantly strengthen
India’s negotiating teams by inducting subject-matter specialists, blind
to their origins. Despite repeated reassurances of the primacy of our
ambassadors, this proposal was systemically stymied by interested
parties in the MEA. It has languished there for five years, as has our
ability to strengthen negotiating teams. This must change.
[Ref: Indian Express]
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