Pro­tect­ing In­dia’s trade in­ter­ests

The Pak Banker - - OPINION - Shailja Singh

THE Trans-Pa­cific Part­ner­ship agree­ment (TPP) has been signed in Auck­land on Fe­bru­ary 4 by Aus­tralia, Brunei, Canada, Chile, Ja­pan, Malaysia, Mex­ico, New Zealand, Peru, Sin­ga­pore, the U.S. and Viet­nam. Even as it is touted as the world's big­gest trade deal to date, with sig­na­tory coun­tries ac­count­ing for more than 50 per cent of global GDP, the TPP still has a long-drawn rat­i­fi­ca­tion process ahead of it. Sign­ing of the agree­ment pro­vides an op­por­tune mo­ment for In­dia, which is not part of the TPP, to take stock and for­mu­late its re­sponse to the trade chal­lenges it now faces on both in­ter­na­tional and do­mes­tic fronts.

Dis­cussing new is­sues The TPP con­tains de­tailed obli­ga­tions on so-called new is­sues such as labour, in­vest­ment, en­vi­ron­ment, ecom­merce, com­pe­ti­tion and govern­ment pro­cure­ment. Th­ese is­sues are not cov­ered un­der the World Trade Or­gan­i­sa­tion's (WTO) mul­ti­lat­eral um­brella. How­ever, as the re­cent Nairobi Min­is­te­rial Dec­la­ra­tion stated, "some" mem­bers want to ex­plore and dis­cuss new is­sues and ar­chi­tec­ture at the WTO. There is an in­creased like­li­hood of the U.S. push­ing the TPP as the ne­go­ti­at­ing tem­plate for new is­sues at the WTO, since it bet­ter re­flects the in­ter­ests of its own do­mes­tic lob­bies. As new is­sues are not likely to be in In­dia's over­all in­ter­est, the coun­try must firmly re­sist such at­tempts. But this may only be ac­com­plished with a high de­gree of pre­pared­ness and smart coali­tion-build­ing with like-minded al­lies.

In­dia also needs to closely watch the reg­u­la­tory regimes in TPP coun­tries, en­sur- ing that th­ese coun­tries do not vi­o­late their WTO com­mit­ments in the process of im­ple­ment­ing the TPP. The WTO does al­low a mem­ber to de­vi­ate from its obli­ga­tions with re­spect to a free trade area; how­ever, such a de­vi­a­tion is not un­qual­i­fied. If a TPP coun­try re­stricts the mar­ket ac­cess for non-TPP mem­bers such as In­dia on ac­count of higher labour stan­dards, a po­ten­tial vi­o­la­tion of WTO pro­vi­sions may arise, which In­dia should not shy away from pur­su­ing us­ing the WTO's dis­pute set­tle­ment mech­a­nism.

In­dia should ac­tively seek dis­ci­plines on pri­vate stan­dards at the WTO to re­strict their pro­lif­er­a­tion. The TPP at­tempts to reg­u­late and, ac­cord­ing to some ex­perts, le­git­imises this regime. A num­ber of stud­ies have pre­dicted that the TPP will lead to pro­lif­er­a­tion of pri­vate stan­dards. How­ever, the fact is that such stan­dards have ex­isted as a par­al­lel reg­u­la­tory regime in in­ter­na­tional trade for some time now. For in­stance, in 2006, the Sialkot sports goods man­u­fac­tur­ing clus­ter in Pak­istan came close to clo­sure when Nike de­cided to stop sourc­ing foot­balls made in the area, on ac­count of vi­o­la­tion of its labour stan­dards that pro­hib­ited child labour. De­spite sig­nif­i­cantly im­pact­ing in­ter­na­tional trade, th­ese stan­dards have es­caped regulation un­der the WTO. This is be­cause they do not orig­i­nate from the 'state' but from pri­vate bod­ies. Dis­ci­plin­ing such pri­vate stan­dards at the WTO is much needed and is some­thing that should be ur­gently pur­sued. What In­dia must do Im­pelled by the loom­ing on­set of the TPP, In­dia should con­clude, on a pri­or­ity ba­sis, its on­go­ing free trade ne­go­ti­a­tions. Th­ese in­clude the In­dia-EU Bi­lat­eral Trade and In­vest­ment Agree­ment and the mega Re­gional Com­pre­hen­sive Eco­nomic Part­ner­ship with the As­so­ci­a­tion of South­east Asian Na­tions, China and oth­ers. Ben­e­fits from th­ese agree­ments will help mit­i­gate some of the ex­port losses that In­dia may face in leather goods, tex­tile, and plas­tics on ac­count of trade di­ver­sion due to TPP. Aim­ing to di­ver­sify ex­port des­ti­na­tions to hith­erto un­tapped mar­kets like Latin Amer­ica and Africa would also help.

In­dia also needs to iden­tify its trade in­ter­est ar­eas and pro­pose al­ter­na­tive ne­go­ti­at­ing tem­plates. One such area is biopiracy, pro­tec­tion of tra­di­tional knowl­edge, and the link be­tween the WTO's Trade-Re­lated Aspects of In­tel­lec­tual Prop­erty Rights agree­ment and the Con­ven­tion on Bi­o­log­i­cal Di­ver­sity. There have been sev­eral in­stances of biopiracy in the past, of In­dian tra­di­tional knowl­edge, such as the patent­ing of the wound-heal­ing prop­er­ties of haldi (turmeric). Be­ing among the 12 mega bio­di­ver­sity-rich coun­tries, In­dia needs to bring this is­sue to the ne­go­ti­at­ing ta­ble in its own free trade agree­ments.

On the do­mes­tic front, In­dia should ac­cel­er­ate the process of mak­ing its prod­ucts more cost-com­pet­i­tive. There is no deny­ing that In­dia's in­fras­truc­tural de­fi­ciency, in­clud­ing port con­ges­tion and poor road con­nec­tiv­ity, is one of the main hur­dles in at­tain­ing this cost com­pet­i­tive­ness. Ad­dress­ing th­ese will have the dual ef­fect of not only mak­ing In­dia's ex­ports cost-com­pet­i­tive, but will also make them more at­trac­tive for in­ter­na­tional lead firms to in­te­grate In­dia in global value chains. The govern­ment should launch a com­pre­hen­sive ini­tia­tive to en­able In­dian ex­porters to not only com­ply with stan­dards preva­lent in the im­port­ing mar­ket, but also demon­strate the com­pli­ance through ap­pro­pri­ate con­for­mityassess­ment pro­ce­dures.

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