November 2015
The Trans-Pacific Partnership, which excludes India, highlights need to get the economy in order
By Tarun Kumar G. Singhal
Raman Jokhakar Chartered Accountants
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Even as Prime Minister Narendra Modi toured the world and talked up India’s trade interests, President Barack Obama may just have thrown him a one-two punch by concluding negotiations for the Trans-Pacific Partnership (TPP). Twelve countries on the Pacific Rim — encompassing 40% of the global economy — participated in the negotiations. Fragmentation of world trade into standalone blocs is not in India’s interest as we don’t get a say in determining the rules of the game. However, with trade deals at WTO hard to actualise — indeed, India has often played the role of spoiler here — TPP signals the advent of new trade challenges for India.
For example India will lose out to Vietnam, which is a member of TPP, when it comes to accessing the US market in job spinning sectors such as textiles, clothing and leather footwear. At a strategic level, TPP is being driven by a US determined to put its stamp on global trading rules. It is about enhancing the trade competitiveness of developed countries such as the US and Japan, with their emphasis on higher labour and environmental standards. TPP is not yet a done deal. Its detailed text has not yet been finalised and national legislatures of members have to approve it. But with the US already in talks with EU to conclude a Transatlantic Trade & Investment Partnership, continuing fragmentation is inevitable.
Where does that leave India? These trade deals do affect India — not only because they favour insiders as opposed to outsiders but also because they set general standards over which we have no say. Getting in can be a problem as well. For example, draconian rules for intellectual property protection would favour US and European Big Pharma, while crippling Indian pharma which is good at producing low-cost drugs.
There is no alternative to getting our economy in order. The size of India’s market is an advantage which needs to be leveraged by an environment in which economic activity is easier. NDA must push domestic reform, which has to be complemented by smarter tactics at ongoing trade talks. For instance, the government can bring in more domain experts laterally in negotiations over a Regional Comprehensive Economic Partnership (RCEP), where there will likely be demands for TPP-like rules. India needs to be seen as a country which comes to talks with ideas, without which we cannot secure national interests. TPP is a rude wake up call.
(Source: Editorial in The Times OF India dated 08-10- 2015)
