Deccan Herald | 22 January 2018
Trade talks: a busy year ahead for India
by Shalini Bhutani
The year 2017 began with uncertainties in the global environment. On trade policy, the year did not end on any clearer terms than it started with. Uncertainty remains over several ongoing negotiations with different sets of countries. It is most visible at the World Trade Organisation (WTO), in the Regional Comprehensive Economic Partnership (RCEP) and in India’s bilateral trade relations with Europe and the US.
The inauguration of Donald Trump as US President in January 2017 set the tone — things were to be different in relations with the US. In the early days of his office, he pulled the US out of the Trans-Pacific Partnership (TPP), then reopened NAFTA and questioned the WTO. The Obama-era interest in a bilateral investment treaty with India also seems to have waned, but the recently appointed US Ambassador to India, Ken Juster, has hinted at a Free Trade Agreement in the future.
For India, Trump’s taking office ushered in uncertainty over the visa regime for its software professionals, too. Indians on work visas in the US also face uncertainty over whether or not their spouses can work. With the Trump administration, the element of unpredictability in the relationship will always remain.
In the Asia Pacific region, talks for the proposed RCEP continued throughout last year. India, too, hosted one of the RCEP rounds in July in Hyderabad. Amongst the sticking points for India is the need for all 16 RCEP countries (Asean+6) to reduce tariffs to zero for all products from the date RCEP comes into force.
The concern is about foreign goods, particularly from China, flooding the Indian market at the cost of local producers. India wants free movement for its professionals to other RCEP countries, but it is uncertain whether India’s interests in the IT-ITeS sector will be fully accommodated.
The Asean wants to wrap up the text of the RCEP in 2018. This month, India will host the Asean-India Commemorative Summit marking the 25th anniversary of India-Asean relations. Commerce is high on the agenda. Though India must use the opportunity to make clear its position on RCEP, New Delhi is also to host a round of discussions in February on intellectual property provisions in RCEP.
The European Union, the world’s largest trading block, is itself facing its biggest threat with Brexit. In that setting, India is talking to both the EU and the United Kingdom for FTAs with each of them separately. A new UK-India joint working group on trade issues was formed in November. Also, after being deadlocked for a while, the talks for a proposed bilateral trade and investment agreement (BTIA) with the EU were revived last year.
The four EFTA member states - Iceland, Liechtenstein, Norway and Switzerland - have for almost a decade been attempting a "Trade and Economic Partnership Agreement," or TEPA, between India and EFTA. Talks for the TEPA were held in Liechtenstein in May-June 2017 and later in the year in India, but are still far from over.
The 11th Ministerial Conference (MC11) of the World Trade Organisation in Buenos Aires, Argentina, in December ended inconclusively, with no Ministerial Declaration. New issues were sought to be introduced into the negotiating agenda of the WTO by developed countries and their allies.
In India’s view, agreeing to these would have been extremely divisive. India wants to balance trade liberalisation with the need to protect small farmers and give due attention to food security for the poor. For that, special and differential treatment and special safeguard measures have been a legitimate demand. The permanent solution for public stockholding for food security and domestic support was also among the key issues for India at the MC11.
2017 was indeed a busy year for India’s trade negotiators, given the number of official talks the Government of India is engaged in. These will continue to occupy the government calendar in 2018 as well.
Although Suresh Prabhu took over as the new commerce minister in September, India’s foreign trade strategy and policy is currently being steered by the Prime Minister’s Office and the External Affairs Ministry. External Affairs Minister Sushma Swaraj started 2018 with official visits to Thailand, Indonesia and Singapore.
Trade talks give decision-makers a chance to say that they are attempting certitude in an uncertain world. But there are strong assumptions about FTAs, as free trade itself came to be questioned much more through last year. In such a scenario the buy-in for FTAs by the wider community in highly uncertain times is low.
Prabhu has hinted at a standard operating procedure that will be followed while entering into any new FTA. To start the year well, the government needs to do a full ex-ante assessment of the FTAs it is currently negotiating. Moreover, gains ought not to be simply measured in terms of the volumes of imports and exports. As Prabhu himself told the world: India is home to more than 600 million poor people. So, most importantly, we need to see how and if trade relations actually improve people’s lives and livelihoods.