To embrace mega regional pacts... ‘Prepare and undertake domestic market reforms’
T he challenge posed by the proposed mega-regional trade pact - the TransPacific Partnership (TPP) - will impact India's exports significantly and the country would do well to make a concerted all-round effort to prepare for and undertake domestic market reform and push for not just export of manufactures but also of services and agricultural products, said Suresh Prabhu, Union Minister for Railways.
Inaugurating the conference on 'Changing Global Economic Scenario: Implications for India's Trade Policy and Make in India Programme', organised jointly by FICCI, International Institute for Sustainable Development (IISD) and Centre for WTO Studies in New Delhi on May 12, 2015, Prabhu said, “Change is inevitable and we have to change ourselves with the impending change” in the global economic architecture. “We need to find out how to create a legally binding framework where every country is a winner,” he added.
In the emerging global economic environment, domestic reforms would be the key to improving product standards, manufacturing and services delivery. Such an approach was vital to remain competitive in the global markets as the US was fast tracking the finalisation of TPP.
The TPP is being pushed by the US for greater trade with Asia Pacific countries including Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam (representing 40 per cent of global GDP), and negotiations are on.
The domestic factors contributing to exports slowdown in India include weak infrastructure, challenging labour laws in the case of manufacturing, rising wages and scarcity of skilled labour in the case of services, he said.
The commerce ministry in its five-yearly (2015-20) foreign trade policy released recently said the new features of the global trading landscape such as mega-regional agreements will profoundly affect India's trade. “They go well beyond trade in goods and services into areas such as investment, competition (including state-owned enterprises), intellectual property, labour, environment, government procurement, transparency, regulatory coherence and dispute settlement,” he said.
Earlier, while addressing a panel on senior policy makers, Rajeev Kher, Commerce Secretary, Government of India, said that India must recognise emerging challenges from the mega regional agreements currently under negotiation, and start preparing right away. He added that the need of the hour was to rev up the domestic economy keeping in mind a long term growth.
Kher said that India needs to focus on fundamentals rather than front end trade policy. India needs to have new aggressive and strategic FTAs that are product and service specific with countries with which FTAs are being presently negotiated. He added that integration with Asia and South East Asia would also
Suresh Prabhu, Union Minister for Railways, addressing the conference.