Discuta o sistema de política de livre comércio na índia

Dilema da política comercial da Índia e o papel da reforma doméstica.

Hardeep S. Puri.

A Índia enfrenta desafios significativos na área da política comercial e mdash; a desaceleração econômica global, o protecionismo crescente, os negócios mega-comércio paralisados ​​que poderiam, no tempo, ser reavivados e, talvez, mais importantes, suas próprias preocupações domésticas. Para que a Índia atinja seus objetivos políticos, o governo e a indústria, em particular o setor manufatureiro, devem se preparar para oportunidades e maior envolvimento em uma arena de comércio multilateral em evolução. As prioridades da Índia devem incluir a tomada de medidas políticas para se adequar aos padrões globais e apoiar a Organização Mundial do Comércio (OMC) para relançar as negociações multilaterais.

A Política de Comércio Exterior da Índia visa (1) aumentar a participação do país no comércio global dos atuais 2,1% para 3,5% e (2) o dobro de suas exportações para US $ 900 bilhões até 2020. No entanto, a Índia enfrenta muitos obstáculos: a falta de compreensão completa da política comercial e seus benefícios potenciais, um setor industrial pouco desenvolvido, resultados insatisfatórios de acordos comerciais regionais e relações restritas, inclusive com seus principais parceiros comerciais. O quadro da política comercial da Índia deve ser apoiado por reformas econômicas que resultam em uma economia indiana aberta, competitiva e tecnologicamente inovadora. A participação da fabricação no produto interno bruto precisa crescer através da implementação eficiente de esquemas como a iniciativa Make in India. O capital e a inovação dos EUA precisam trabalhar de mãos dadas com recursos indianos e empreendedorismo.

Como chegar lá.

Crie uma parceria global duradoura com os principais parceiros comerciais da Índia, particularmente os Estados Unidos. Os dois países, juntamente com outros países, devem trabalhar para quebrar barreiras ao movimento de bens e serviços e apoiar uma integração mais profunda nas cadeias de suprimentos globais. Participar ativamente e com entusiasmo na Parceria Econômica Regional Integral e procurar unir-se à Cooperação Econômica Ásia-Pacífico. Dado que a Índia não é parte de nenhum acordo de mega-comércio (e talvez nunca seja), isso seria uma parte importante de uma agenda de política comercial positiva. Ajustar imediatamente os padrões globais sobre barreiras técnicas ao comércio e medidas sanitárias e fitossanitárias. Com alguns negócios comerciais atualmente em espera ou não avançando em sua forma atual, a Índia, particularmente a indústria, tem um tempo valioso para se adequar a esses padrões. Revive o primado do sistema multilateral de comércio. Este avivamento é o interesse nacional da Índia, uma vez que o país é melhorado pelo tratamento da nação mais favorecida, em grande parte fornecido pelos sistemas de comércio multilateral ancorados na OMC. Ao contrário dos acordos plurilaterais externos, a OMC oferece o melhor cenário possível para a prossecução de uma agenda comercial baseada no desenvolvimento.

Introdução.

De acordo com o ex-primeiro-ministro da Singapura, Goh Chok Tong, a Índia atualmente tem o potencial de iniciar uma economia global estagnada, como a China fez há dez anos. 1 Mas, dado que a Índia enfrenta enormes desafios de desenvolvimento, esta é uma avaliação realista? Com 1,3 bilhão de pessoas e uma economia de US $ 2 trilhões, 2 o país tem mais pessoas pobres que as de todos os países subsaarianos. 3 Entre 1991 e 2018, a economia da Índia produziu apenas 140 milhões de empregos, uma fração dos mais de 300 milhões necessários; 4 e enquanto 1 milhão de pessoas estão atualmente entrando na força de trabalho todos os meses 5, a presença de 17,7 milhões de desempregados é uma bomba de tempo que nenhum governo pode ignorar. 6.

Em comparação, a China levantou centenas de milhões de seus cidadãos da pobreza, aumentando a renda per capita de US $ 873 em 1999 para US $ 8.027 em 2018. 7 A força do setor manufatureiro da China e um cenário de política comercial favorável tornaram possível esta notável transformação . Em 1995, quando a China entrou na OMC, suas exportações foram de cerca de US $ 149 bilhões, 8 com um superávit comercial de quase US $ 20 bilhões. 9 Até 2018, as exportações da China subiram para US $ 2,3 trilhões, 10 com um superávit de US $ 382 bilhões. 11 O crescimento econômico da China representou mais de três quartos da redução global da pobreza, permitindo que o mundo alcance o Objetivo de Desenvolvimento do Milênio das Nações Unidas de reduzir para metade a pobreza global até 2018. 12.

A Índia é capaz de realizar feitos semelhantes de crescimento econômico e integração na economia global? Seu setor de manufatura pode se tornar um grande produtor de empregos e bens comercializáveis? Pode aproveitar todas as oportunidades que a arquitetura de negociação global em evolução possa oferecer?

A Parceria Transpacífica (TPP) e a Transatlantic Trade and Investment Partnership (TTIP) & mdash, enquanto ambas se derrubaram e não são as únicas manifestações desta arquitetura em evolução. Vários acordos de livre comércio regional (regional) e sub-regional (ALC) já estão em vigor ou provavelmente evoluirão. Para maximizar as oportunidades dentro desse ambiente, a Índia terá de superar os desafios importantes da política comercial: questões domésticas; a situação global em evolução; e a necessidade de uma agenda de política comercial positiva, como talvez a única via viável para que a Índia melhore sua relação econômica com os principais parceiros comerciais. Os Estados Unidos e a América do Norte, de longe, a maior economia do mundo, continuarão a definir a agenda da política de comércio global, e os próprios Estados Unidos terão de reformular alguns dos seus objetivos de política comercial à luz dos desenvolvimentos recentes. Não obstante, os Estados Unidos ainda determinarão a agenda comercial, mesmo que seja criado um vácuo na liderança na OMC. A Índia poderia, se agir com sabedoria e de forma empreendedora, aproveitar esse vácuo.

O enigma indiano.

O maior desafio para o desenvolvimento de uma política comercial forte na Índia é o setor de fabricação mal desenvolvido. Apesar de ter crescido depois que a Índia se embarcou em uma liberalização econômica focalizada em 1991, a parcela de fabricação do Produto Interno Bruto (PIB) caiu para 16,2 por cento em 2018 e em 2018 e foi o que era em 1989 e 1990 (16,4 por cento). 13 A questão de como aumentar substancialmente a participação na fabricação é difícil, sem respostas fáceis. As restrições incluem a disponibilidade limitada de energia e terra, falta de acesso à tecnologia, baixa produtividade, aumento do custo do trabalho e dificuldades de negócios. Progresso foi feito, mas foi insuficiente. De longe, o impedimento mais grave para o avivamento do setor de manufatura é a escassez de terras.

O maior desafio para o desenvolvimento de uma política comercial forte na Índia é o setor de fabricação mal desenvolvido.

Na última década, a Índia assinou acordos de comércio livre com a Associação das Nações do Sudeste Asiático (ASEAN), a República da Coréia, o Japão e a Malásia. No entanto, alguns insiders admitem que os parceiros comerciais da Índia ganharam mais com esses acordos do que a Índia. 14.

A experiência da Índia com os acordos comerciais regionais (RTAs) foi menos do que satisfatória por causa da falta de competitividade do setor manufatureiro e da falta de inovação e investimento em setores como têxteis, vestuário e produtos farmacêuticos. Isso resultou em pouco entusiasmo pela adoção de uma postura de política comercial mais ativista dentro do governo, grupos de reflexão e comunidade de políticas comerciais. As dúvidas quanto à atractividade dos acordos comerciais internacionais aumentam quando as preocupações globais com a imigração provocam que outros países rejeitem a demanda da Índia para o movimento mais livre de profissionais (Modo 4 do Acordo Geral sobre Comércio de Serviços [GATS]).

Não obstante esses desafios e duvidas, juntar-se a RTAs poderia trazer benefícios inconvenientes para a Índia. Talvez, o mais importante, faria com que os bens e serviços do país fossem mais competitivos, porque forçaria a indústria indiana a se adaptar aos padrões internacionais em barreiras técnicas ao comércio e restrições sanitárias e fitossanitárias, um ativo inestimável a longo prazo.

O verdadeiro desafio na Índia. . . é a falta de plena compreensão dos benefícios da liberalização do comércio, da paralisia política e, consequentemente, da falta de vontade política.

O verdadeiro desafio na Índia, como em vários outros países, é a falta de plena compreensão dos benefícios da liberalização do comércio, da paralisia política e, consequentemente, da falta de vontade política. Criar uma política comercial bem-sucedida exige uma compreensão da geopolítica e das tendências econômicas globais e da capacidade de negociar vantajosamente. A negociação efetiva só é possível se os decisores tiverem confiança e capacidade para executar as necessárias reformas domésticas correspondentes, algumas das quais exigem ajustes dolorosos.

Ao longo dos anos, a Índia prestou atenção insuficiente ao valor da política comercial. Em 1996, por exemplo, ficou claro que o fim das cotas no âmbito do Acordo Multifibras em 2005 beneficiaria os países em desenvolvimento exportadores mais competitivos e que a modernização da indústria doméstica da Índia era, portanto, crítica. Muitas ações políticas que o governo do Partido Bharatiya Janata empreendeu em 2018, como o esquema de devolução do direito, foram sugeridas em 1996. A paralisia das políticas, a falta de vontade e talvez até a falta de compreensão completa impediram que as medidas necessárias fossem tomadas em 1996. Foram tomadas medidas oportunas, a participação da Índia no comércio global de têxteis e roupas se tornaria muito maior. Em vez disso, Bangladesh, China e Vietnã foram os grandes beneficiários do fim do regime de cotas. Entre 2000 e 2018, a participação da China nas exportações globais aumentou de 10% para 36% em têxteis e de 18% para 39% em vestuário. 15.

A Índia não pode servir os seus interesses econômicos ao permanecer indiferente ou totalmente à resistência à evolução da política comercial global e aos blocos de mega-negociação que podem se desenvolver. Como o professor da Universidade Jawaharlal Nehru, Biswajit Dhar, observa: "A longo prazo, nenhuma grande economia pode permanecer livre de influenciar porque o regime de regras discriminatórias terá consequências sobre o comércio com economias até mesmo não-membros". 16.

Assim, o principal desafio para a política comercial indiana é como reviver o sistema de comércio multilateral moribundo ancorado na OMC. Pode ser no interesse da Índia incentivar mudanças para a OMC, desencorajando a liberalização do comércio através apenas dos ACR e dos ALC.

Para efetuar tal mudança, a política comercial da Índia precisa ser ousada e imaginativa. Deve iniciar consultas intensivas e abrangentes entre os países comerciantes da OMC. Dependendo do resultado das consultas, deve apresentar propostas concretas para iniciar negociações na OMC, incumbindo os países desenvolvidos de reagirem às propostas da Índia. As propostas podem ter que lidar com as questões espinhosas da agricultura, o Modo 4 do AGCS e alguns acordos plurilaterais, como o Acordo de Tecnologia da Informação (ITA-2), contratos governamentais e solução de controvérsias.

A política comercial da Índia precisa ser ousada e imaginativa. Deve iniciar consultas intensivas e abrangentes entre os países comerciantes da OMC.

O interesse da Índia é o comércio da nação mais favorecida (MFN) e a segurança e previsibilidade associadas ao sistema de comércio multilateral ancorado na OMC. Garantir que ambos exigem que a Índia não seja vista como um spoiler, como é atualmente, em Genebra.

Abordagens passadas e presentes da Índia para os acordos comerciais.

Em 1982, os Estados Unidos fizeram um empenho decidido para o comércio de serviços incluídos no Acordo Geral de Tarifas e Comércio (GATT), que era essencialmente um quadro legal que abrange o comércio de bens e a imposição de medidas de fronteira (tarifa e não-tarifário). Uma discussão entre William Brock (o representante comercial dos EUA) e Shivraj Patil (o ministro de Estado indiano para o comércio) na reunião ministerial do GATT de 1982 merecem ser lembrados. Representando os Estados Unidos foram Michael Smith (o embaixador dos EUA no GATT) e Andrew Stoler (que mais tarde se tornou um vice-diretor-geral na OMC). No lado indiano estavam o falecido Abid Hussein (então secretário de comércio), B. L. Das (embaixador da Índia no GATT) e o autor deste artigo. Depois de uma breve troca de gentilezas, Brock perguntou, & ldquo; Mr. Ministro, qual é a posição da Índia nos serviços? & Rdquo; Patil disse, & ldquo; Nonnegotiable. & Rdquo; & ldquo; nesse caso, & rdquo; respondeu Brock, & ldquo; eu não entendo por que eu deveria estar desperdiçando seu tempo e meu. & rdquo; Essa foi a Índia de Indira Gandhi. O stand da empresa da Índia resultou em uma decisão ministerial diluída. Dado que os serviços representam quase 57% do PIB da Índia hoje, é argumentável se a Índia tomou a decisão certa na época.

Em contraste, na Conferência Ministerial da OMC de 2018 em Nairobi, o representante indiano sentou-se nas deliberações do grupo selecionado, concordou com a evolução do resultado do pacote e, em seguida, expressou desapontamento após os resultados serem concedidos. A OMC opera com base no consenso. Qualquer país pode bloquear o resultado se o considerar inaceitável. 17.

As sucessivas rodadas de liberalização do comércio no âmbito do GATT e da OMC resultaram na redução das tarifas NMF, embora ainda haja um diferencial significativo entre as taxas vinculadas e efetivas. Em 1990, 1991, por exemplo, a tarifa mais alta da Índia era de 355 por cento e a tarifa média ponderada era de 87 por cento. 18 Em 1996 e 1997, essas tarifas caíram para 52% e 22%, respectivamente. As reduções nas tarifas e a remoção de restrições quantitativas e outras barreiras não-tarifárias ajudam a expandir o comércio, mas não podem garantir que as instalações de fabricação não se mudem para locais com regimes fiscais mais atractivos ou buscam mercados maiores no mercado. O Vietnã, por exemplo, oferece feriados de vinte anos para novos investidores. Incentivos e o que os chineses conseguiram realizar constituem um importante desafio para a política comercial, não só para a Índia, mas também para vários outros países, inclusive os Estados Unidos.

Política comercial recente da Índia.

Anunciando uma nova Política de Comércio Exterior em abril de 2018, o governo do primeiro-ministro Narendra Modi disse que desejava aumentar a participação da Índia no comércio global de 2,1% para 3,5% e dobrar as exportações (para US $ 900 bilhões) até 2020. 19 A política busca para integrar as iniciativas do governo na Índia e Índia Digital.

Modi elaborou seu pensamento e estabeleceu um mapa de estrada claro em um discurso em Washington em junho de 2018:

Continuaremos a fortalecer o & ldquo; Make in India & rdquo; iniciativa. Não se destina apenas a fabricação para o mercado interno ou a substituição de importações. É tanto sobre a fabricação de produtos e serviços de classe mundial para todo o mundo. É por isso que, para nós, as melhorias em relação ao livre comércio são importantes. É muito importante para nós que os países desenvolvidos abram seus mercados, não só para bens de países como a Índia, mas também para serviços. Eu vejo isso como uma proposta vantajosa para os EUA e para a Índia. A Índia é a futura força de recursos humanos do mundo com uma população jovem e trabalhadora. Na minha visão, uma parceria entre o capital americano e a inovação, e os recursos humanos indianos e o empreendedorismo podem ser muito poderosos. Estou convencido de que podemos fortalecer nossas economias através dessa parceria. 20.

Esta declaração ousada, especialmente na sequência das exportações que diminuem por dezessete meses consecutivos desde dezembro de 2018, precisa ser atuada. 21 Mas para fazê-lo de forma eficaz, o governo precisará avaliar continuamente como essas prioridades (por exemplo, a parceria entre o capital americano e a inovação e os recursos indianos e o empreendedorismo) estão se desenrolando nas tendências globais em evolução.

A implementação dos grandes esquemas da Índia, o Projeto Smart City Project, Make in India, Skill India Program e Digital India & mdash, exigirá investimento estrangeiro direto e uma reinicialização e rejuvenescimento abrangentes do setor de manufatura da Índia. O governo Modi fez um bom começo. Em 2018, a Índia atraiu mais investimento estrangeiro direto (IDE) do que a China e os Estados Unidos, triplicando o IDE de Greenfield, que atingiu US $ 63 bilhões. 22 Na verdade, a Índia tornou-se o principal país do mundo para o IDE Greenfield, ultrapassando os Estados Unidos (US $ 59,6 bilhões) e a China (US $ 56,6 bilhões).

Implementação dos grandes esquemas da Índia. . . exigirá investimento estrangeiro direto e uma reinicialização e rejuvenescimento abrangentes do setor de manufatura da Índia.

A iniciativa Make in India, no entanto, possivelmente se deparou com virezas internacionais causadas por recessão, protecionismo e desenvolvimentos tecnológicos, como automação e impressão em 3D. Como resultado, a Make na Índia só pode afetar o mercado indiano, especificamente o setor de defesa.

Relações com os Estados Unidos.

Os Estados Unidos são, de longe, o maior parceiro comercial do país. O comércio bilateral de mercadorias aumentou de um modesto US $ 5,6 bilhões em 1990 para US $ 66,9 bilhões em 2018. 23 O valor dos serviços comercializados foi de cerca de US $ 58,8 bilhões em 2018. Durante a primeira visita ministerial da Modi nos Estados Unidos em 2018, os dois lados fixou um objetivo de US $ 500 bilhões por ano no comércio de bens e serviços, sem estabelecer um prazo.

Posteriormente, em 8 de junho de 2018, Modi abordou uma sessão conjunta do Congresso dos EUA: & ldquo; Nosso relacionamento superou as hesitações da história, & rdquo; ele disse, acrescentando que, em todos os setores da Índia, eu vejo os EUA como um parceiro indispensável. & rdquo; O componente comercial e econômico da relação entre os dois países deve ocupar um lugar privilegiado, juntamente com questões relacionadas à política externa e de segurança, na criação de uma parceria estratégica bilateral significativa.

A importância que os dois países atribuem ao aumento dos laços econômicos e comerciais está refletida no parágrafo 29 do comunicado conjunto divulgado após a visita de Modi em 2018 aos Estados Unidos:

A fim de aumentar substancialmente o comércio bilateral, eles se comprometeram a explorar novas oportunidades para quebrar barreiras ao movimento de bens e serviços e apoiar uma integração mais profunda nas cadeias de abastecimento globais, criando empregos e gerando prosperidade em ambas as economias. 24.

No entanto, os elevados ideais e pronunciamentos dos chefes de Estado e de governos não se traduzem, por si só, em cooperação significativa e no envolvimento bilateral no mundo real das negociações comerciais. A convergência estratégica que os dois países buscam não se filtra para o segmento comercial, o que, no seu núcleo, continua a ser contraditório. Os Estados Unidos estiveram no banco do motorista, pressionando por uma liberalização agressiva do comércio, a abertura de mercados e blocos mega-comerciais com base em compromissos da OMC mais.

Acordos comerciais regionais relevantes para a Índia.

Parceria Trans-Pacífico.

O TPP é um acordo comercial entre doze países do Pacífico (Austrália, Brunei, Canadá, Chile, Japão, Malásia, México, Nova Zelândia, Peru, Cingapura, Estados Unidos e Vietnã). O acordo deveria ser concluído em 2018; Após negociações prolongadas, foi assinado em 4 de fevereiro de 2018. No entanto, o presidente dos Estados Unidos, recentemente eleito, Donald Trump, que criticou a TPP durante todo o período eleitoral, já abandonou o acordo. Teria entrado em vigor quando todos os doze signatários o ratificarem ou, após dois anos se passaram, quando os membros que representam 85% do PIB dos signatários o ratificaram (ver tabela 1). Dado que os Estados Unidos representam 68% do PIB total do grupo, a ratificação não será possível sem sua assinatura. 25.

Dado que os Estados Unidos deram o seu presidente & ldquo; fast-track & rdquo; aprovação & mdash, o que significa que o Congresso poderia rejeitar ou aprovar o acordo sem considerar separadamente cada provisão, e a probabilidade de uma assinatura dos EUA era baixa em qualquer caso. O TPP figurou de forma proeminente na campanha presidencial dos EUA. A candidata democrata Hillary Clinton apoiou a TPP como secretária de estado, mas sob a pressão de seu oponente principal, Bernie Sanders, socialista do Vermont, expressou reservas graves sobre o acordo e jurou proteger os empregos americanos. Os republicanos tradicionalmente defenderam o comércio livre, incluindo a TPP; mas Trump baseou sua campanha em hostilidade em relação a acordos de comércio internacional e parceiros, particularmente México e China. Seu argumento central era que esses acordos exportam empregos americanos, particularmente empregos industriais. Ele denunciou a TPP.

A mesma retórica antitrade e antiglobalização observada na campanha presidencial dos EUA fez eco de argumentos no debate Brexit. Mesmo se o & ldquo; Remain & rdquo; O voto venceu, metade do eleitorado britânico claramente se sentiu alienado. A crise financeira de 2008 e sua conseqüência de crescimento lento nas economias desenvolvidas intensificaram as desigualdades na partilha de ganhos e perdas, exacerbando a desigualdade e as divisões a nível nacional entre os mais bem educados e economicamente aptos e o resto da população. Tanto a Brexit quanto a posição atual dos EUA sobre o comércio refletem essencialmente a incapacidade dos países industrializados avançados para lidar com taxas lentas de crescimento econômico.

Dado que os Estados Unidos rejeitaram a TPP, o acordo será adiado indefinidamente. Após algum tempo, no entanto, os Estados Unidos e outros países poderiam procurar renegociar alguns de seus termos. As perspectivas de encontrar acordo sobre se e como acomodar novas demandas pelos Estados Unidos (e outros países) são difíceis de prever.

Há mais notícias ruins para o TPP. Um relatório de 2018 da Comissão de Comércio Internacional (ITC) conclui que o déficit comercial dos EUA com parceiros do FTA aumentou US $ 141 bilhões (418%) de 1989 para 2018. 26 O déficit comercial dos EUA com todos os parceiros não-FTA diminuiu US $ 46 bilhões (6 por cento) desde 2005. Desde o ITC, que tradicionalmente apoiou os TLCs, o relatório desencadeou sinos de alarme.

Embora o TPP não seja implementado na sua forma atual, vale a pena analisar como a Índia se classificaria se fosse. Em um estudo preparado para o Conselho Empresarial dos Estados Unidos da Índia (USIBC), C. Fred Bergsten, do Instituto Peterson para Economia Internacional, defendeu fortemente a favor da Índia tentando negociar sua entrada na TPP:

O problema da competitividade da Índia é agravado pela ausência dos novos acordos comerciais megaregais do mundo, especialmente a Parceria Transpacífica (TPP), mas também a Parceria Transatlântica de Comércio e Investimentos (TTIP). Se a China e o resto do fórum de Cooperação Econômica da Ásia-Pacífico (APEC) se juntarem a uma segunda etapa da TPP que continua a excluir as perdas anuais de exportação da Índia e da Índia, chegarão a US $ 50 bilhões. A Índia está sendo deixada para trás pelo sistema de comércio mundial. 27.

A Índia poderia beneficiar de ganhos de exportação de mais de US $ 500 bilhões por ano (um aumento de 60%, mais do que qualquer outro país) para se juntar a uma TPP expandida ou participar da abrangente área de comércio livre da Ásia-Pacífico que a APEC está agora a considerar. 28 A renda nacional da Índia aumentaria por um enorme 4 por cento (mais de US $ 200 bilhões) como resultado. 29 A Índia poderia aumentar ainda mais suas exportações ao participar nas principais negociações plurilaterais sobre serviços, bens ambientais e compras governamentais que agora estão ocorrendo na OMC.

A Índia poderia aumentar ainda mais suas exportações ao participar nas principais negociações plurilaterais de serviços, bens ambientais e compras governamentais que agora estão ocorrendo na OMC.

A interseção entre a política comercial e a política eleitoral sempre produz linhas de falhas. A globalização ea liberalização comercial produzem vencedores e perdedores. Os decisores alcançam as seções não convincentes exaltando as virtudes do negócio comercial proposto, muitas vezes, exagerando os benefícios potenciais.

Em 1993, Gary Hufbauer e Jeffrey Schott, do Instituto Peterson, projetavam que o Acordo de Livre Comércio da América do Norte (NAFTA) levaria ao aumento do superávit comercial americano com o México que criaria 170 mil novos empregos por ano nos Estados Unidos. Menos de dois anos após a implementação do NAFTA, Hufbauer reconheceu que suas projeções de trabalho haviam sido totalmente erradas, observando que "a melhor figura para o efeito de trabalho do NAFTA é aproximadamente zero". . . . A lição para mim é ficar longe da previsão de emprego. & Rdquo; 30.

A TPP procura influenciar o comércio internacional de três formas: reduzindo ou eliminando tarifas sobre produtos qualificados entre os países membros, regulando o papel das empresas estatais e alcançando coerência regulatória em uma escala sem precedentes entre seus membros. Os parceiros de negociação manifestaram interesse em reduzir de forma abrangente os obstáculos ao comércio de bens (incluindo produtos agrícolas) e serviços, bem como taxas e disciplinas sobre uma ampla gama de tópicos (incluindo novas questões políticas que nem a OMC nem os TLC existentes cobrem). Todas essas mudanças afetariam o comércio externo da Índia de maneiras que são difíceis de prever.

Alguns comentaristas indianos argumentaram que a Índia deveria aspirar a aderir à TPP. Mas a Índia não foi convidada para se juntar à TPP e, mesmo que o acordo fosse avançar, provavelmente não seria convidado nos próximos anos nas circunstâncias atuais. O atraso do acordo (se não a morte) dá à Índia espaço para tomar ações domésticas corretivas para gerenciar as conseqüências de uma TPP revisada ou revivida e, assim, aumentar a probabilidade de aderir a uma TPP revisada em algum momento. Isso fornece um melhor cenário para a Índia.

Cooperação Econômica Ásia-Pacífico.

A APEC é um fórum para vinte e uma economias membros da Pacific Rim que promove o comércio livre em toda a região da Ásia-Pacífico. A Índia não é um membro. Um relatório do Asia Policy Society Institute sugere por que é um momento ideal para a Índia se unir à APEC e ilustra os benefícios e possíveis obstáculos à sua adesão. 31.

A participação da Índia na APEC beneficiaria os programas de desenvolvimento do governo, que dependem fortemente de "maior acesso a mercados estrangeiros, fontes de investimento e cadeias de valor para reforçar a fabricação e criar empregos em casa". 32 e preparar empresários e empresas indianas para a economia global em mudança. Uma taxa de crescimento impressionante, juntamente com os esforços persistentes de Modi na diplomacia econômica pública na região e além, deram a Índia e espero que finalmente possa alcançar a adesão após quase duas décadas de desapontamento. & Rdquo; Entretanto, juntar-se à APEC poderia ser difícil, dado as reservas de alguns membros que percebem as políticas da Índia como insuficientemente favoráveis ​​ao comércio aberto e maior integração regional.

A participação da Índia na APEC beneficiaria os programas de desenvolvimento do governo.

O próprio APEC também se beneficiaria da participação da Índia no fórum, pois seus membros teriam melhor acesso às oportunidades de oferta e investimento de trabalho do país e a um mercado de consumo que inclua uma classe média de 200 milhões de pessoas em expansão rápida até 2020 e 475 milhões até 2030. 34.

Parceria Transatlântica de Comércio e Investimento.

Em termos de ambição e audácia de escala, o TTIP poderia ser classificado ao nível da TPP proposta.

A Parceria Transatlântica de Comércio e Investimento (T-TIP) é um acordo de comércio e investimento ambicioso, abrangente e de alto padrão que está sendo negociado entre os Estados Unidos e a União Européia (UE). A T-TIP ajudará a desbloquear oportunidades para famílias, trabalhadores, empresas, fazendeiros e fazendeiros americanos através do aumento do acesso aos mercados europeus de produtos e serviços da Made-in-America. Isso ajudará a promover a competitividade, emprego e crescimento internacional dos EUA. 35.

A decisão da Grã-Bretanha de deixar a União Européia efetivamente colocou o TTIP em espera na sua forma atual. A parceria exigirá a renegociação. No entanto, seria útil para o Ministério do Comércio da Índia revisar os capítulos sobre o meio ambiente, padrões trabalhistas, contratos governamentais, empresas estatais e barreiras não-tarifárias para, pelo menos, determinar o que o país enfrenta e para que a Índia & rsquo; A indústria da S pode ser encorajada a atualizar. A Índia recebeu novamente espaço de respiração valioso, que seu setor industrial não deve desperdiçar.

Parceria Econômica Regional Abrangente.

Lançado no Camboja em 20 de dezembro de 2018, o RCEP é um TLC entre a ASEAN e seus parceiros do FTA (Austrália, Brunei, China, Camboja, Índia, Indonésia, Japão, República da Coréia, Laos, Malásia, Myanmar, Nova Zelândia, Filipinas, Cingapura, Tailândia e Vietnã). Os dezesseis países participantes representam quase metade da população do mundo, 30% do PIB global e 25% das exportações mundiais. 36 O RCEP procura alcançar um acordo de parceria econômica moderno, abrangente, de alta qualidade e mutuamente benéfico que abranja o comércio de bens, serviços, investimentos, cooperação econômica e técnica, propriedade intelectual, concorrência e solução de controvérsias.

A Índia está participando das negociações do RCEP, mas parece estar fazendo isso com extrema cautela. Embora existam razões válidas para isso, a Índia deve ser mais direta por causa do seguinte:

As normas ambientais e laborais não são grandes problemas neste acordo. O acordo dá à Índia uma excelente oportunidade para negociar com a China, o que achou difícil de fazer bilateralmente. A Índia teria que recalibrar suas demandas sobre o movimento de profissionais (Modo 4), para que seus parceiros respondam de forma positiva. A Índia poderia incluir alguns objetivos comuns sobre as barreiras ambientais e não tarifárias que não seriam parte da solução de controvérsias, mas sim seriam "o melhor esforço" cláusulas.

Um mapa rodoviário para a Índia.

A Índia e os Estados Unidos estavam entre os signatários originais do GATT em 1947. Esse preâmbulo do acordo encapsula a lógica da política comercial, que continua a ser tão válida hoje como era então. O primeiro de seus dois parágrafos cita os objetivos de & ldquo; elevando os padrões de vida, assegurando o pleno emprego e o crescente volume de renda real. & Rdquo; 37 O segundo cita as modalidades para alcançá-los, incluindo acordos "reciprocos e mutuamente vantajosos" direcionados para a redução substancial das tarifas e outros obstáculos ao comércio e para a eliminação do tratamento discriminatório no comércio internacional.

Durante a maior parte dos primeiros trinta anos de existência, o sistema de comércio multilateral compreendeu um quadro negociado de direitos e obrigações que regem o comércio de bens. Estabeleceu medidas de fronteira para as barreiras tarifárias e não tarifárias. The Tokyo Round (1973–1979), the seventh round of multilateral trade negotiations, reduced tariffs and resulted in a number of stand-alone agreements on nontariff barriers. The fragmentation of the trade system dates back to this round of talks. Member countries could accede to the Tokyo Round agreements on an à la carte basis. India chose to do just that, acceding to only some of these agreements. 38.

India found comfort in MFN trade, which became an article of faith—the only exception being the Generalized System of Preferences, a scheme that extended concessions and preferences on a unilateral basis. As long as India benefitted, it liked the scheme. The minute India became subject to conditions and found itself excluded, it protested, albeit without much success.

For valid reasons, India has found it difficult to accept the inclusion of issues relating to Trade-Related Aspects of Intellectual Property Rights ( TRIPs ), the environment, labor standards, and investment and regulatory matters. India has therefore found it difficult to accede to FTAs, which are invariably designed and operated on a WTO plus basis. India’s problem today is not with TRIPs per se in the WTO, but with what is known as WTO TRIPs-plus standards. India is now fully compliant with WTO TRIPs standards.

The dilemma now is that the WTO is moribund, and developed countries are unwilling to pursue issues except on their terms. Action is therefore shifting to plurilateral agreements in the WTO and RTAs/FTAs. India is a player in neither; it is not a party to either the plurilateral Trade in Services Agreement (TiSA) or the ITA-2 being negotiated at the WTO, although its interests are at stake in both areas.

At the heart of the trade policy differences between the United States and India is intellectual property. India recognizes the need to reward creativity, innovation, and inventions and to balance that against the requirements of public good. The United States allows multinational drug companies to rake in large profits, as part of a healthcare system that is unaffordable even for the average American citizen. India, on the other hand, is the world’s leading manufacturer and supplier of generic drugs. There was therefore understandable concern when the USIBC reported in its submission to the U. S. trade representative that India had given an assurance that it would no longer resort to compulsory licensing. India flatly denied it had provided such an assurance, recalling that it had resorted to compulsory licensing only once. The USIBC’s clarification of April 14, 2018, is interesting:

USIBC recognizes and supports the Government of India’s sovereign right to issue a compulsory license (CL). However, in order to attract investments that are imperative for innovation to thrive in India, the Council and its members seek transparency, consistency and clarity in the legislation and circumstances under which such compulsory licenses can be issued so as to enable well-informed business decisions.

Innovation is the bedrock of Prime Minister Modi’s vision for Make in India, Start Up India and Digital India. USIBC and its members commend the Government of India for its openness to engage in dialogue with the industry in a manner that will grow the economy and bring superior innovation to the lives of Indians. 39.

In May 2018, the government of India released a new intellectual property rights policy. However, if innovation needs to be promoted, perhaps India should have unveiled an innovation incentivization policy, as intellectual property rights are the flip side of the innovation coin. The new policy does not seek to delineate the elements that would promote and incentivize innovation and help release the creative potential and energies of India’s youth, especially graduates of the I ndian institutes of technology and other leading educational and research institutions. It is not clear how the policy would (1) preserve and promote India’s preeminent position as the pharmacy of the world or ensure that India continues to produce drugs and pharmaceuticals of high quality at competitive prices and thus play a role in promoting the basic right to health; (2) protect the right to use the flexibilities under the TRIPs agreement, especially with regard to the issuance of compulsory licensing related to public health; or (3) protect, promote, and enhance India’s genetic resources, prevent biopiracy, and protect traditional knowledge and folklore.

If innovation needs to be promoted, perhaps India should have unveiled an innovation incentivization policy, as intellectual property rights are the flip side of the innovation coin.

A Positive Trade Policy Agenda.

There is overwhelming evidence that trade has contributed to global prosperity, raised standards of living, and contributed to steadily growing real income. 40 Globalization, however, produces both winners and losers. Trade produces prosperity but also inequality; it can have devastating effects on the manufacturing sector if it is subjected to subsidized or dumped products and exchange rate manipulation. Although the trading system provides remedies against unfair trade practices, little can be done if predatory pricing is institutionally entrenched, when entire systems do not work on the basis of market prices and it is difficult to determine where state subsidization ends and enterprise dumping begins.

Developments in global trade policy confront Indian policymakers with some hard choices. 41 An ostrich-like switch-off mode can only exacerbate the country’s problems. A good starting point would be to establish how India went so badly wrong in entering into trade agreements that are so low on ambition and counterproductive to its interests. It is axiomatic that if an FTA results in trade expansion but is in the interest of one partner, it is a badly negotiated agreement. A series of badly negotiated agreements should result in the sacking of trade negotiators, not a turn away from free trade.

India’s ill-conceived trade pacts have resulted in inverted duty structures, high import duties on raw materials and intermediates, and lower duties on finished goods that discourage the production and exports of value added items. 42 The Modi government has been bold in conceptual clarity, but it appears to be handicapped by its inward-looking bureaucracy.

There has to be inner consistency and harmony between the objectives of policy and the implementing modalities. It is not possible to want to increase the share of global trade and create millions of jobs by turning one’s back on trade policy or relying on a trade policy that isolates India from the major trading arrangements globally taking shape.

Trade and foreign policies must by and large be in sync.

Trade and foreign policies must by and large be in sync. The world of trade policy requires give and take. Negotiations for an FTA with the European Union have been languishing since 2007. The European Union is India’s largest trading partner, accounting for 13 percent of India’s total share of goods and services. A good indicator of a country’s external engagements is whether its foreign and trade policies reinforce each other. India has struggled with a foreign policy segment that seeks strategic content with its trading partners and a trade policy segment that is more circumspect and inward-looking, often for good reason.

Conceptual clarity is also required regarding actions that could broadly be categorized as trade promotion and actions that would fall under the rubric of trade policy. India’s merchandise exports have a narrow account for 78 percent of total exports, and manufacturing exports are rapidly losing competitiveness, 43 primarily because of a poor logistics infrastructure and weak trade facilitation.

India’s experiment with special economic zones (SEZs) did not take off. The establishment of free ports or other schemes need to be considered on the merits. 44 One might be forgiven for asking why free ports would succeed if SEZs failed or why the Chinese can organize themselves more effectively than other countries. Meanwhile, a key problem at hand is India’s Supreme Court notice to the center and some states on returning unused SEZ land that belonged to farmers. 45 The governments must consider whether to improve or revise the policy.

Under the rubric of trade policy come issues like the real effective exchange rate and the global trading architecture. India has not compensated for its declining exports to the European Union and the United States with increases elsewhere. Clearly, the trade policy bureaucracy has some explaining to do.

India should take advantage of delays in the TPP and TTIP to set its domestic house in order and register as a major trading nation.

India should take advantage of delays in the TPP and TTIP to set its domestic house in order and register as a major trading nation. If it does not, the prime minister’s grand plan to increase annual trade turnover with the United States to $500 billion and raise India’s share of global trade to 3.5 percent will ring hollow.

India should revive the multilateral trade negotiations at the WTO. Doing so requires farsightedness on India’s part as well as compromises in some of the positions it has taken on agriculture, Mode 4 of GATS, ITA-2, and government procurement. Its offers can be conditional, putting the onus of taking them forward on India’s major developed country partners and the concessions they are willing to grant India. At the end of the day, India’s interests are better served by the WTO and MFN trade than by the myriad RTAs and FTAs.

India does not appear to have any option other than to autonomously adjust to world standards on technical barriers to trade, sanitary/phytosanitary standards, and environmental and regulatory standards and to engage in crisis-mode upgrading of the physical infrastructure that is crucial to trade. Unless the industrial sector steps up and assumes responsibility for meeting world standards, there will be limits to what the government can do in terms of improving the country’s infrastructure.

Unless the industrial sector steps up and assumes responsibility for meeting world standards, there will be limits to what the government can do in terms of improving the country’s infrastructure.

The Trade Facilitation Agreement of the WTO—to which India is now a signatory and the cabinet has now approved—would appear to provide the guiding framework within which the required actions can be taken. India needs to work on a road map on a war footing that can bring its goods and services into conformity with the highest standards on technical barriers to trade; sanitary/phytosanitary rules; labeling, packaging, customs, clearance, and freight procedures; and the best or next-best environmental and labor regulations.

Undertaking these actions will require hard decisions, some adjustment costs, and even pain in the short and medium term. These actions are inescapable, however, if India’s manufacturing sector is to be given a fighting chance of competing in the global market place. Action is required on the part of both government and industry and related stakeholders.

Sobre o autor.

Ambassador Hardeep Singh Puri served as India’s permanent representative to the United Nations in Geneva and New York. He served as a member and chair of nine dispute settlement panels of the GATT and WTO between 1982 and 2007. Between 1988 and 1991, he was the coordinator of the Multilateral Trade Negotiations Project of the UN Development Program and UN Conference on Trade and Development, which advised developing countries in the Uruguay Round. During a career spanning thirty-nine years, he held senior positions in the Indian Ministry of External Affairs, including as secretary for economic relations, as well as important diplomatic posts in Brazil, Japan, Sri Lanka, and the United Kingdom.

2 For the population figure, see World Bank, “Population, Total,” World Development Indicators database, accessed January 2017, data. worldbank/indicator/SP. POP. TOTL; and for the economy figure, see World Bank, “India,” World Development Indicators database, accessed January 2017, worldbank/en/country/india.

3 Sabina Alkire et al., “Poverty in Rural and Urban Areas: Direct Comparisons Using the Global MPI 2018,” Oxford Poverty and Human Development Initiative, June 2018, ophi. uk/wp-content/uploads/Poverty-in-Rural-and-Urban-Areas-Direct-Comparisons-using-the-Global-MPI-2018.pdf.

10 World Bank, “Trade, Merchandise Exports (Current US$),” World Development Indicators database, accessed January 2017, data. worldbank/topic/trade? end=2018&locations=CN&start=2018.

12 “Discussion Paper: China, the Millennium Development Goals, and the Post-2018 Development Agenda,” United Nations Development Program China, February 2018, cn. undp/content/dam/china/docs/Publications/UNDP-CH_discussionpaper-MDGPost2018.pdf.

15 Biswajit Dhar, “Weaving a Success Story,” Hindustan Times , July 20, 2018.

17 D. Ravi Kanth, “What Happened at Nairobi and Why: Dismantling of Doha Development Agenda and India’s Role,” Economic and Political Weekly 51, no. 11 (March 2018): epw. in/journal/2018/11/insight/what-happened-nairobi-and-why. html.

18 Arvind Panagariya, “The WTO Trade Policy Review of India, 1998,” World Economy 22, no. 6 (August 1999): 799–824, columbia. edu/

20 “Prime Minister's Keynote Speech at 40th AGM of US India Business Council (USIBC),” press release, Press Information Bureau, Government of India, Prime Minister's Office, June 8, 2018, pib. nic. in/newsite/PrintRelease. aspx? relid=146054.

21 Since this paper was drafted, merchandise exports fell for a total of nineteen consecutive months until June 2018, when exports increased 1.3 percent; C. P. Chandrasekhar and Jayati Ghosh, “Understanding India’s Export Collapse,” Hindu Business Line , November 21, 2018, thehindubusinessline/opinion/columns/why-indias-exports-are-falling/article9370929.ece.

24 Office of the Press Secretary, “JOINT STATEMENT: The United States and India: Enduring Global Partners in the 21st Century,” press release, White House, June 7, 2018, https://whitehouse. gov/the-press-office/2018/06/07/joint-statement-united-states-and-india-enduring-global-partners-21st.

25 World Bank, “Gross Domestic Product, 2018,” World Development Indicators database, accessed February 2017, databank. worldbank/data/download/GDP. pdf.

26 “Trans-Pacific Partnership Agreement: Likely Impact on the U. S. Economy and on Specific Industry Sectors,” United States International Trade Commission, May 2018, https://usitc. gov/publications/332/pub4607.pdf; and Public Citizen, “New ITC Report Finds Disturbing Trends in U. S. Economy After Implementation of Free Trade Agreements,” June 30, 2018, citizen/documents/ITC-Report-FTAs. pdf.

27 C. Fred Bergsten, “India’s Rise: A Strategy for Trade-Led Growth,” Peterson Institute for International Economics, September 2018, https://piie/sites/default/files/publications/briefings/piieb15-4.pdf.

30 Bob Davis, "Free Trade Is Headed for More Hot Debate," Wall Street Journal , April 17, 1995, cited in Public Citizen, “NAFTA’s Broken Promises 1994-2018: Outcomes of the North American Free Trade Agreement,” 2018, citizen/documents/NAFTAs-Broken-Promises. pdf.

31 Harsha V. Singh and Anubhav Gupta, “India’s Future in Asia: The APEC Opportunity,” Asia Society Policy Institute, March 2018, asiasociety/files/ASPI_APEC_fullreport_online. pdf.

35 “Transatlantic Trade and Investment Partnership (T-TIP),” Office of the United States Trade Representative, https://ustr. gov/ttip.

38 The “codes” negotiated covered subsidies and countervailing measures, technical barriers to trade, import-licensing procedures, government procurement, customs valuation, antidumping, bovine meat, international dairy, trade in civil aircraft, and other issues.

40 “Commission Staff Working Document: Trade as a Driver of Prosperity,” European Commission, November 2018, trade. ec. europa. eu/doclib/docs/2018/november/tradoc_146940.pdf.

Comentários (2)

Some significant home truths. Bridging the gap between policy objectives and implementation requires a coordinated, all-of-government approach, with a clear understanding of geopolitical realities and trade-offs required. Critically, our economic Ministries have to emerge from a blinkered approach and a silo mentality, if the government's ambitious target of doubling our exports by 2020 and expanding our share in global exports is to be achieved.

It is interesting to note that many a authors sweep India's manufacturing sector as lacking in competitiveness and productivity. It is not so. Atleast not the part of manufacturing sector that has integrated itself with world supply chain (e. g., auto, engineering components, precision metal work, aerospace components). There are deming award winners for manufacturing quality in dozens in India. At the same time, there are parts of manufacturing sector that has never reached any potential (e. g. electronics hardware manufacturing). There are legacy reasons for the way our manufacturing sector is. To build an argument based on 80s level of competitiveness of our domestic sector doesn't take the debate far! And for a change, we need to place more efforts to build a trade related bureaucracy in economic and commerce ministries that understands the nuances of trade negotiations than the commonly found generalist 'non-negotiable' masters who come on deputation tenures and land up directly on negotiating tables. Certainly, the article addresses a lot of relevant issues that needs deeper debate.

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Frequently Asked Question (FAQ)

Free Trade Agreements.

Article 1 of GATT (General Agreement on Tariffs and Trade) which enunciates the most favoured nation (MFN) principle of WTO states that " any advantage, favour, privilege, or immunity granted by any contracting party to any product originating in or destined for any other country shall be accorded immediately and unconditionally to the like product originating in or destined for the territories of all other contracting parties ."

However, derogations from this MFN principle are permitted for forming FTAs under specific conditions as per the following provisions of the WTO Agreements:

&touro; Article XXIV of GATT for goods.

&touro; Article V of GATS (General Agreement on Trade in Services) for services.

The specific conditions under Article XXIV of the GATT permitting FTAs, are:

&touro; FTA members shall not erect higher or more restrictive tariff or non-tariff barriers on trade with non-members than existed prior to the formation of the FTA.

&touro; Elimination of tariffs and other trade restrictions be applied to " substantially all the trade between the constituent territories in products originating in such territories ."

&touro; Elimination of duties and other trade restrictions on trade within the FTA to be accomplished " within a reasonable length of time ," meaning a period of no longer than 10 years.

Moreover, the " Enabling Clause ", allows developing countries to form preferential trading arrangements without adhering to the conditions under Article XXIV.

FTAs are arrangements between two or more countries or trading blocs that primarily agree to reduce or eliminate customs tariff and non tariff barriers on substantial trade between them. FTAs, normally cover trade in goods (such as agricultural or industrial products) or trade in services (such as banking, construction, trading etc.). FTAs can also cover other areas such as intellectual property rights (IPRs), investment, government procurement and competition policy, etc.

Preferential Trade Agreement (PTA) : In a PTA, two or more partners agree to reduce tariffs on agreed number of tariff lines. The list of products on which the partners agree to reduce duty is called positive list. India MERCOSUR PTA is such an example. However, in general PTAs do not cover substantially all trade.

Free Trade Agreement (FTA) : In FTAs, tariffs on items covering substantial bilateral trade are eliminated between the partner countries; however each maintains individual tariff structure for non-members. India Sri Lanka FTA is an example. The keydifference between an FTA and a PTA is that while in a PTA there is a positive list of products on which duty is to be reduced; in an FTA there is a negative list on which duty is not reduced or eliminated. Thus, compared to a PTA, FTAs are generally more ambitious in coverage of tariff lines (products) on which duty is to be reduced.

Comprehensive Economic Cooperation Agreement (CECA) and Comprehensive Economic Partnership Agreement (CEPA) : These terms describe agreements which consist of an integrated package on goods, services and investment along with other areas including IPR, competition etc. The India Korea CEPA is one such example and it covers a broad range of other areas like trade facilitation and customs cooperation, investment, competition, IPR etc.

Custom Union : In a Customs union, partner countries may decide to trade at zero duty among themselves, however they maintain common tariffs against rest of the world. An example is Southern African Customs Union (SACU) amongst South Africa, Lesotho, Namibia, Botswana and Swaziland. European Union is also an outstanding example.

Common Market : Integration provided by a Common market is one step deeper than that by a Customs Union. A common market is a Customs Union with provisions to facilitate free movements of labour and capital, harmonize technical standards across members etc. European Common Market is an example.

Economic Union : Economic Union is a Common Market extended through further harmonization of fiscal/monetary policies and shared executive, judicial & legislative institutions. European Union (EU) is an example.

Early harvest scheme is a precursor to a free trade agreement (FTA) between two trading partners. This is to help the two trading countries to identify certain products for tariff liberalisation pending the conclusion of FTA negotiation. It is primarily a confidence building measure. A good example of an EHS is between India and Thailand signed in October 2003, wherein 83 products were identified to be reduced to zero in a phased manner. The EHS has been used as a mechanism to build greater confidence amongst trading partners to prepare them for even bigger economic engagement.

The major bilateral and regional agreements of India are:

Source: Compiled from Commerce Ministry web site “Trade Agreements” and Srivastava. Ajay, Chapter 27, Free Trade Agreements, Business Impact of WTO, FTAs and other International Trade Issues,

For the purposes of FTAs, the "base rate" is the critical element in all aspects of negotiations/phasing that are carried out. The base rate is the applied MFN duty of any year which is decided mutually. In an FTA tariff reduction is generally undertaken with reference to the base rate i. e. from the applied MFN tariffs. However, the WTO negotiations are always based on "bound duty rates" and not the MFN applied duties.

A Comprehensive Economic Cooperation Agreement (CECA) or a Comprehensive Economic Partnership Agreement (CEPA) is different from a traditional Free Trade Agreement (FTA) on two counts.

Firstly, CECA/CEPA are more comprehensive and ambitious that an FTA in terms of coverage of areas and the type of commitments. While a traditional FTA focuses mainly on goods; a CECA/CEPA is more ambitious in terms of a holistic coverage of many areas like services, investment, competition, government procurement, disputes etc.

Secondly, CECA/CEPA looks deeper at the regulatory aspects of trade than an FTA. It is on account of this that it encompasses mutual recognition agreements (MRAs) that covers the regulatory regimes of the partners. An MRA recognises different regulatory regimes of partners on the presumption that they achieve the same end objectives.

Countries negotiate Free trade Agreements for a number of reasons.

&touro; By eliminating tariffs and some non-tariff barriers FTA partners get easier market access into one another's markets.

&touro; Exporters prefer FTAs to multilateral trade liberalization because they get preferential treatment over non-FTA member country competitors. For example in the case of ASEAN, ASEAN has an FTA with India but not with Canada. ASEAN's custom duty on leather shoes is 20% but under the FTA with India it reduced duties to zero. Now assuming other costs being equal, an Indian exporter, because of this duty preference, will be more competitive than a Canadian exporter of shoes. Secondly, FTAs may also protect local exporters from losing out to foreign companies that might receive preferential treatment under other FTAs.

&touro; Possibility of increased foreign investment from outside the FTA. Consider 2 countries A and B having an FTA. Country A has high tariff and large domestic market. The firms based in country C may decide to invest in country A to cater to A's domestic market. However, once A and B sign an FTA and B offers better business environment, C may decide to locate its plant in B to supply its products to A.

&touro; Such occurrences are not limited to tariffs alone but it is also true in the case of non-tariff measures. Especially when a Mutual Recognition Agreement (MRA) is reached between countries A and B. Some experts are of the view that slow progress in multilateral negotiations due to complexities arising from large number of countries to reach a consensus on polarising issues, may have provided the impetus for FTAs.

India has preferential access, economic cooperation and Free Trade Agreements (FTA) with about 54 individual countries. India has signed bilateral trade deals in the form of Comprehensive Economic Partnership Agreement (CEPA)/Comprehensive Economic Cooperation Agreement (CECA)/FTA/Preferential Trade Agreements (PTAs) with some 18 groups/countries. India is a late, and cautious, starter in concluding comprehensive preferential tariff agreements covering substantially all trade with some of its trading partners.

Information on India’s FTAs including the tariff concessions thereof is available in the website of the Department of Commerce at commerce. gov. in. Further, a web portal “ India’s Trade Compendium ” has been developed which provides insights into India’s trade (both MFN and preferential) through the following information:

&touro; Classification of goods at disaggregated HS levels.

&touro; Preferential tariffs for India and its FTA partners.

&touro; MFN tariffs for India, ASEAN and India’s Top 25 export destinations.

&touro; SPS-TBT requirements for India and Top 25 export destinations.

&touro; Search Criteria Based on HS Codes and / or Product Names.

Rules of origin (ROO) are the criteria needed to determine the country of origin of a product for purposes of international trade. Their importance is derived from the fact that duties and restrictions in several cases depend upon the source of imports. Rules of origin are used:

&touro; to implement measures and instruments of commercial policy such as anti-dumping duties and safeguard measures;

&touro; to determine whether imported products shall receive most-favoured-nation (MFN) treatment or preferential treatment;

&touro; for the purpose of trade statistics;

&touro; for the application of labelling and marking requirements; e.

&touro; for government procurement.

The criteria in the rules of origin sets out specific and detailed conditions on the level of processing that an imported item from a non FTA partner country must undergo in the FTA partner country (or other eligible countries in the region) before being eligible to be called an originating product of a FTA partner country. Some of the common criteria used are.

&touro; change in tariff classification (this could be at the tariff chapter, tariff heading or tariff sub heading level)

&touro; regional value addition.

&touro; substantial manufacturing or processing by excluding some minimal operations.

The Rules of Origin are important in the context of making an assessment on the application of preferential tariff under an FTA. Hence, without the rules of origin, the preferential tariffs under an FTA cannot be implemented. Moreover, the non-members to the FTA are not provided with the benefit of the preferential tariffs, agreed between the FTA partners.

The rules of origin are enforced through a certificate of origin that is issued by authorised agencies of the trading partner. An exporter cannot avail of the customs tariff preferences under the FTA without submitting this certificate of origin from the authorised agency.

List of Agencies Authorized to issue Certificate of Origin [Preferential]

The exporters would need to apply to the authorised agencies for issuance of the certificate of origin. The fee structure i. e. for the sale of blank form, certification fee and other charges (such as tatkal services) are available on the website of Export Inspection Council (EIC) at eicindia. gov. in.

For the purposes of claiming the preferential tariff treatment for an originating good of the exporting Party, a certificate of origin is submitted to the customs authority of the importing Party by the importer, together with the documents required for the importation of the good in accordance with the laws and regulations of the importing Party. The details regarding certification and verification are set out in the individual FTA provisions.

SPS measures is an acronym for “ sanitary and phytosanitary ” measures and broadly includes measures for the protection of plant, animal and human health. S. No 1 of Annex A of the World Trade Organisation’s (WTO’s) SPS Agreement describes these measures in detail. TBT is an acronym for “ technical barriers to trade ” and broadly includes standards, technical regulations and conformity assessment procedures as defined in WTO’s TBT Agreement. Since SPS and TBT could be barriers to trade, many FTAs deal with them.

Some of the other non tariff measures that figure in FTA chapters are:

&touro; import licencing procedures.

The stakeholders encountering NTMs (including SPS and TBT measures) can bring these to the notice of the territorial divisions of the Department of Commerce. A database of such NTMs is also available on the website of the Department. Any such inputs from stakeholders would enable to update this database.

The tariff concessions in an FTA are implemented at the ground level through customs notifications. In the case of phased implementation of concessions, the notifications are issued on a yearly basis and are available on the website of the Central Board of Excise and Customs.

Yes, the FTAs have provisions for review and implementation. This is normally done at specified intervals and there is an institutional mechanism to undertake such a review. It is important for stakeholders to provide a regular feedback on the operation of the FTAs for this mechanism to be effective. For example, problems faced in SPS/TBT measures or other NTMs need to be highlighted.

The four modes of supply -

Mode 1: Cross border supply (supply from the territory of a Party into the territory of the other Party). For example an architect can send his architectural plan through electronic means; a teacher can send teaching material to students in any other country; a doctor sitting in Germany can advise his patient in India through electronic means. In all these cases, trade in services takes place and this is equivalent to cross-border movement of goods.

Mode 2: Consumption abroad (consumption in the territory of a Party by the service consumer of the other Party). For example a tourist, using hotel or restaurant services abroad; a ship or aircraft undergoing repair or maintenance services abroad.

Mode 3: Commercial presence (by a service supplier of a Party, through commercial presence in the territory of the other Party). In this case, the service supplier establishes a legal presence in the form of a joint venture/subsidiary/representative/branch office in the host country and starts supplying services. For example a bank opens its branch in another country.

Mode 4: Presence/movement of natural persons (by a service supplier of a Party, through presence of natural persons of a Party in the territory of the other Party). For example Independent service suppliers or ISS (e. g. doctors, engineers, individual consultants, accountants, etc.) who supply services in another country. However, GATS covers only temporary movement and not citizenship, residence or employment on a permanent basis in the foreign country.

The Mutual recognition relates with qualifications, academic certifications and experience requirements in services. A Mutual Recognition Agreement (MRA) is an agreement by which two or more countries agree to recognize one another's conformity assessments. In Services, these are applied on the recognition of professional qualifications.

Regulatory bodies of various professional services like engineering, accountancy, architecture etc. are encouraged to enter into a mutual recognition agreement (Article VII:4b) with their counterparts.

The various categories of natural persons are defined as under:

a) Contractual service suppliers (CSS): A service supplier of country “A” without a commercial presence in country “B”, sends one of its employees to country “B” to supply a service, pursuant to a service contract it has concluded with a consumer there;

b) Intra-corporate transferees (ICT): A service supplier of “A” transfer’s one of its employees to the commercial presence it has established in “B”;

c) Business visitors (BV) and services salespersons: A service supplier of country “A” sends one of its employees to country “B” for the purpose of either setting up a commercial presence or negotiating the sale of a service on its behalf. Business visitors are not directly engaged in the delivery of the service, but are just facilitating future trade, which may take place though a variety of modes of supply.

d) Independent Professionals (IP): A service supplier of country “A” goes to country “B” to supply a service in his individual capacity. The supplier would hence not represent or be an employee of any business entity that has the service contract.

Are free trade agreements a dead end for India?

Author: Biswajit Dhar, Jawaharlal Nehru University.

When India began negotiations with ASEAN in 2004 for a free trade agreement (FTA) covering the goods sector, it marked a major step in the evolution of the country’s engagement with the global economy.

The agreement signalled a departure from India’s previous position regarding bilateral and regional agreements. Until its deepened engagement with ASEAN in 2003, India was almost unequivocally wedded to the multilateral trading system. The only aberrations in India’s position came in the form of the bilateral deals that it was engaged in with its immediate neighbours in the South Asian region.

The India–ASEAN FTA, which came into effect in January 2018, is significant because it has emerged as the cornerstone of India’s Look East policy. The FTA was conceived as a part of the Framework Agreement on Comprehensive Economic Cooperation between India and ASEAN agreed to in 2003. This agreement set out the roadmap for deepening economic cooperation between the two sides through the establishment of an India–ASEAN Regional Trade and Investment Area (RTIA).

The RTIA was to be realised through progressive elimination of tariffs and non-tariff barriers in substantially all trade in goods and by progressive liberalisation of trade in services with substantial sectoral coverage. At the same time, India and its ASEAN partners agreed to establish a liberal and competitive investment regime that facilitated and promoted investment within the RTIA.

Negotiations were initiated with rather ambitious targets: the deal on trade in goods was scheduled to conclude by June 2005, while the negotiations on services and investment — which were to be initiated immediately after the conclusion of the agreement on goods — were to be concluded by 2007. The negotiations went well beyond these timelines: the goods agreement became operational only in 2018 and although the negotiations on services and investment agreements were concluded at the end of 2018, they are yet to be implemented.

But India’s bilateral and regional economic engagement has undergone a complete transformation. India is one of the most active countries in negotiating and concluding bilateral economic agreements. Thus far, comprehensive economic agreements have been concluded with Singapore, Malaysia, Japan and South Korea. Several more are in the pipeline, including ones with the EU, Australia, New Zealand, Canada and Indonesia.

Perhaps the most significant is the Regional Comprehensive Economic Partnership (RCEP) agreement. RCEP will be a mega-regional agreement that includes the ASEAN members; Índia; Australia; New Zealand; China; Japão; and South Korea.

But India’s experience with the bilateral deals it has already signed is not promising.

India has not been able to sufficiently leverage these agreements to increase its presence in the markets of its partners. In most cases, the shares of India’s merchandise exports to its partners have either stagnated or declined since the middle of last decade. In overall terms, the share of India’s exports to partners with whom it has concluded agreements declined from nearly 38 per cent in 2004 to 33 per cent in 2018.

The more disconcerting development for India is that the share of manufactured exports in total exports has declined for all partner countries. In the case of ASEAN, the share of manufactured products in the export basket has declined from over 58 per cent in 2005 to less than 44 per cent in 2018, while, for Japan and Singapore, the decline has been from over 50 per cent to around 36 per cent during the same period.

India’s inability to capitalise on its preferential trade agreements demonstrates the extent to which it continues to remain a marginal player in most of these markets. In all countries, with the exception of Singapore, India’s share in the partner country’s imports has either declined or shown little improvement. In three, India’s share is yet to reach 1 per cent of the trade partner’s total imports.

And, while India was unable to secure market share in its partners’ economies, imports from partners remained relatively high. India’s trade deficit with its FTA partners is between two and four times larger than it was a decade ago. If the aim of the bilateral strategy was to boost the Indian export sector, then it has failed.

India’s indifferent performance has evoked strong reactions from government; the more dominant view is that these agreements must be reviewed. It is not yet clear, however, when and how the reviews might be undertaken.

A more useful strategy would be two-pronged. India should first identify weaknesses in the domestic economy that cause inefficiencies in productive sectors, and find ways of quickly addressing them. It should also pursue effective engagement with partner countries to ensure the removal of trade barriers, especially non-tariff barriers in goods and the regulatory barriers in services, which have adversely impacted on the export performance of Indian enterprises.

With many comprehensive economic agreements in the pipeline, now is the time for India to establish the contours of its negotiating strategy. India must put itself in a situation where it is able to effectively articulate its interests (offensive as well as defensive) on all the critical issues that are on the negotiating table.

Dr Biswajit Dhar is Professor at the Centre for Economic Studies and Planning School of Social Sciences, Jawaharlal Nehru University, New Delhi.

India inches towards liberalisation at RCEP by Amitendu Palit India looks east to RCEP for economic growth by Ganeshan Wignaraja India looks east to ASEAN with Delhi Dialogue by Geethanjali Nataraj Why can’t India and the EU sign an FTA? by Geethanjali Nataraj India–ASEAN FTA in services: good for the region, very… by Geethanjali Nataraj Why the RCEP matters for Asia and the world by Ganeshan Wignaraja Can India negotiate a new trade strategy? by Amitendu Palit What’s next after Australia’s trade deal with China? by Shiro Armstrong Is bigger better for ASEAN in a mega-regional world? by Razeen Sally.

Singapore’s government embroiled in domestic crisis managem. by Michael Barr South Korea’s astonishing political year by Stephen Costello Australia in an age of geopolitical transition by Gareth Evans Old enemies reconcile as Malaysian elections near by Clive Kessler Self-interest shapes China’s policies toward the internatio. by Andrew J Nathan Marketing morality in Indonesia’s democracy by Vedi Hadiz.

East Asia Forum welcomes comments, both for adding depth to analysis and for bringing up important new issues. Original comments adding insight and contributing to analysis are especially encouraged.

The editors retain the right to refuse and edit comments at any time.

India’s Free Trade Agreements.

Apr. 27 – Free trade agreements are normally made between two countries. Many governments, throughout the world have either signed FTA, or are negotiating or contemplating new bilateral free trade and investment contracts.

However, there are two types of free trade agreements: namely, bilateral and multilateral. Every customs union, trade common market, economic union, customs and monetary union also has a free trade area.

India looks at regional trading arrangements (RTAs) as “building blocks” towards the overall objective of trade liberalization. Therefore, it is participating in a number of RTAs which include structures such as free trade agreements (FTAs), preferential trade agreements (PTAs), and comprehensive economic cooperation agreements (CECAs).

A free trade agreement among two countries or group of countries agrees to abolish tariffs, quotas and preferences on most of the goods (if not all) between them. Countries choose an FTA if their economical structures are complementary, not competitive. India enjoys FTAs, till date, with the following two countries:

Srilanka (December 28, 1998) Thailand (October 9, 2003)

It is a bilateral or multilateral treaty or any other enforceable compact which commits two or more nations to specified terms of commerce, most of time involving mutually beneficial concessions.

Comprehensive Economic Cooperation Agreement.

A framework agreement is one which sets the period for future substantive liberalization by defining the scope and provisions of orientation for some new area of discussions. List of countries with which India enjoys a framework agreement with are as mentioned under:

GCC states i. e. the member states of the Cooperation Council for the Arab States of the Gulf The Association of South East Asian Nations Chile.

South Asia Free Trade Agreement (SAFTA) with Pakistan, Nepal, Sri Lanka, Bangladesh, Bhutan and the Maldives.

Preferential Trade Agreement.

This trade gives preferential right of entry to only certain products. It is done by dropping tariffs, but it does not abolish them completely. PTA is established through trade pact and it is the weakest form of economic integration. India enjoys PTA with the following countries:

Afghanistan Chile MERCOSUR – It is a trading community in Latin America comprising Brazil, Argentina, Uruguay and Paraguay. It has Chile and Bolivia as its associate members. MERCOSUR was formed in 1991 with the objective of facilitating the free movement of goods, services, capital and people among the four member countries.

South Asian Free Trade Agreement.

The Agreement on South Asian Free Trade Area (SAFTA) was approved by all the member States of the South Asian Association for Regional Cooperation (SAARC) during the twelfth ‘SAARC Summit’ held in Islamabad on January 4-6, 2004. Therefore, SAFTA came into force from January 1, 2006.

SAARC was recognized in Dhaka on December 7-8, 1985 with the objectives of:- promoting the interests of people of South Asia; increasing economic development and social progress; supporting active partnership in economic development and social progress; supporting active partnership in the economic, social, cultural, technical and scientific fields; intensification and cooperation in international forums on matters of similar interest; and cooperating with international and regional organizations with similar aims and purposes. Its members include Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka.

The purpose of SAFTA is to endorse and improve mutual trade and economic cooperation among the ‘Contracting States’ by inter-alia:

Eliminating blockades to trade in, and facilitating the cross-border movement of goods between the territories of the Contracting States; Promoting conditions of fair competition in the free trade area, and ensuring equitable benefits to all Contracting States, taking into account their respective levels and pattern of economic development; Creating effective mechanism for the implementation and application of this Agreement, for its joint administration and for the resolution of disputes; and Establishing a framework for further regional cooperation to expand and enhance the mutual benefits of this Agreement.

The instrument of SAFTA will be as follows according to the agreement:

Trade Liberalization Program Rules of Origin Institutional Arrangements Consultations and Dispute Settlement Procedures Safeguard Measures Any other instrument that may be agreed upon.

BIMSTEC (Bay of Bengal Initiative for Multi Sectoral Technical and Economic Cooperation)

Bangladesh India Myanmar Sri Lanka and Thailand Technical and Economic Cooperation were formed in 1997. A sub-regional monetary collaboration alliance was formed in Bangkok in June 1997. Myanmar joined the grouping later in December 1997. Bhutan and Nepal also joined in February 2004. Its association involves 5 members of SAARC (India, Bangladesh, Bhutan, Nepal & Sri Lanka) and two members of ASEAN (Thailand, Myanmar). Therefore, it is visualized as a ‘bridging link’ between the two major regional groupings i. e. ASEAN and SAARC. Its chairmanship of BIMSTEC revolves among the member countries in alphabetical order. The instant priority of the grouping is consolidation of its activities and making it attractive for economic cooperation.

At its first summit held in Bangkok on July 31, 2004, the short form BIMSTEC was renamed as “Bay of Bengal Initiative for Multi Sectoral Technical and Economic Cooperation.”

Cooperation is proposed in 13 sectors and each sector is led by member countries. These sectors are as follows:

Trade and Investment (Bangladesh); Technology (Sri Lanka); Energy (Myanmar); Transport and Communication (India); Tourism (India); Fisheries (Thailand); Agriculture (Myanmar); Cultural Co-operation (Bhutan); Environment and Disaster Management (India); Public Health (Thailand); People-to-People Contact (Thailand); Poverty Alleviation (Nepal); Counter-Terrorism and Transnational Crimes (India)

Association of South East Asian Nations.

ASEAN was started on August 8, 1967 in Bangkok by the five original member countries, specifically, Indonesia, Malaysia, Philippines, Singapore, and Thailand. Now, it has a membership of 10 countries namely Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam. India is one of the four ‘Summit level Dialogue Partners’ of ASEAN.

India’s associations with the Association of South East Asian Nations (ASEAN) started with its “Look East Policy” in the year 1991. India’s focal point on a strengthened and multi-faceted association with it is an result of ASEAN’s economic, political and strategic significance in the larger Asia-Pacific Region and its potential to become a major partner of India in trade and investment.

It also provides a link for India to bond with the Asia-Pacific-centered economic policies shaping the 21st Century market place. While, ASEAN seeks admission to India’s professional and technical strengths. India and ASEAN have convergence in their security perspectives.

A Framework Agreement on Comprehensive Economic Cooperation between ASEAN and India was signed on October 8, 2003 in Bali (Indonesia). The key elements of the agreement cover are FTA in Goods, Services and Investment, as well as areas of economic cooperation. The agreement also provided for an Early Harvest Programme (EHP) which covers areas of economic cooperation and a common list of items for exchange of tariff concessions as an assurance building measure.

The purposes of this agreement are as follows:

Reinforce and improve economic, trade and investment co-operation between the Parties; Increasingly liberalize and support trade in goods and services as well as create a transparent, liberal and facilitative investment regime; Search new areas and build up appropriate measures for closer economic co-operation between the Parties; and Facilitate the more effective economic integration of the new ASEAN Member States and bridge the development gap among the Parties.

The areas of economic cooperation are as follows:

Where suitable, the Parties agree to strengthen their collaboration in the below areas, including, but not limited to:

Joint Recognition Arrangements, conformity assessment, accreditation procedures, and standards and technical regulations; Non-tariff measures; Customs cooperation; Trade financing; and Business visa and travel facilitation.

Sectors of cooperation.

Agriculture, fisheries and forestry; Services:- media and entertainment, health, financial, tourism, construction, business process outsourcing, environmental; Mining and energy:- oil and natural gas, power generation and supply; Science and technology:- information and communications technology, electronic-commerce, biotechnology; Transport and infrastructure:- transport and communication; Manufacturing:- automotive, drugs and pharmaceuticals, textiles, petrochemicals, garments, food processing, leather goods, light engineering goods, gems and jeweler processing; Human resource development:- capacity building, education, technology transfer; and Others: handicrafts, small and medium enterprises, competition policy, Mekong Basin Development, intellectual property rights, government procurement.

Trade and investment promotion.

Fairs and exhibitions; ASEAN-India web links; and Business sector dialogues.

The countries consent to implement capacity building programmes and technical assistance, particularly for the New ASEAN Member States, in order to regulate their economic structure and increase their trade and investment with India.

Countries may set up other bodies as may be necessary to coordinate and execute any economic cooperation activities undertaken pursuant to this Agreement.

India-Mercosur Preferential Trade Agreement (PTA)

A framework agreement was signed between India and MERCOSUR on June 17, 2003. The plan of this framework agreement is to generate circumstances and mechanisms for discussions in the first stage, by granting mutual tariff preferences and in the second stage, to bargain a free trade area between the two parties in conventionality with the rules of the World Trade Organization. As a follow up to the framework agreement, a preferential trade agreement was signed in New Delhi on January 25, 2004. The plan of this Preferential Trade Agreement is to increase and reinforce the accessible relations between MERCOSUR and India and endorse the growth of trade by yielding mutual fixed tariff preferences with the ultimate objective of creating a free trade area between the parties.

MERCOSUR is a trading community in Latin America formed in 1991 and comprising Brazil, Argentina, Uruguay and Paraguay. It was formed with the objective of facilitating the free movement of goods, services, capital and people among the four member countries. It is the fourth largest integrated market after the European Union (EU), North American Free Trade Agreement (NAFTA) and ASEAN.

India and Singapore Comprehensive Economic Cooperation Agreement India-Sri Lanka Free Trade Agreement India-Chile Preferential Trade Agreement India-Afghanistan Preferential Trade Agreement India-Bhutan Trade Agreement India-Nepal Trade Treaty Framework agreement for establishing free trade between India and Thailand Free trade agreement between India and Gulf Cooperation Council (GCC) India-Japan trade agreement Joint study group between India and Korea Trade agreement between India and Bangladesh Comprehensive economic cooperation and partnership agreement between India and Mauritius.

Benefits of businesses under India’s FTA.

Under free trade agreements, duties are slashed or eliminated on various items, which may have a bearing on the domestic industry Greater coordination and cooperation in customs administration, and banking relationships would also be highly beneficial An evident appeal of an FTA is that members obtain preferred access to the markets of other members Members of trade agreements can also secure agreements in FTAs for rules that bestow advantages upon their trading partners and decrease trade irritants and limitations that could not otherwise be secured from multilateral trade agreements Accord and augment long term market access opportunities for Indian products and services FTAs would enable Indian industries to source inputs at more competitive prices FTAs would offer trade facilitation measures for industries to expand trade, as well as capacity building to improve and enhance their competitiveness.

India’s double taxation avoidance treaty.

Double taxation is the responsibility of two or more taxes on the same income (in the case of income tax), asset (in the case of capital taxes), or financial transaction (in the case of sales taxes).

Double taxation treaty needs to qualify following conditions:

Taxation by two or more countries of the same income, asset or transaction, for example income paid by an entity of one country to a resident of a different country.

The constitution of India has awarded the sovereign powers to charge taxes and to implement collection and recovery thereto on the State under Article 265 by providing that no taxes shall be charged or accumulated except by authority of law.

Double taxation arises when an entity is required to pay two or more taxes for the same income, asset, or financial transaction in diverse countries. Double taxation arises largely due to overlapping tax laws and regulations of the countries where an individual operates his business.

What all double taxation avoidance (DTA)treaty covers?

A usual DTA agreement between India and another country generally covers persons who are residents of India or the other contracting country, which has entered into the contract with India. A person, who is not resident either of India or of the other contracting country, would not be allowed to profit under DTA agreements.

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4 pensamentos sobre & ldquo; India’s Free Trade Agreements ”

can u please elaborate the extent of the agreements and the percentage each country or organisation the free trades are agreed upon. Obrigado.

Several FTA and other trade agreements signed remain only on paper without appropriate notifications form respective governments on implementation of the agreement. These agreements just do not serve any trade purpose.

Take the case of preferential import duty agreement between India and China under ESCAP. No appropriate notification has so far been issued by the government with the result custom officials cannot implement these agreed concessional duties.

Yes, I agree more bilateral work needs to be done in making these agreements effective. Sometimes that takes awhile after they’ve been signed.

That’s very fine notes, It provides a detail view of India’s role in foreign trade.

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The art of the free trade agreement.

The art of the free trade agreement.

A European Court of Justice ruling will have bearing on India-EU pacts.

During their recent meeting in Germany, Prime Minister Narendra Modi and German Chancellor Angela Merkel agreed on the need to resume India-European Union (EU) free trade agreement (FTA) talks. These negotiations, covering trade, investment protection and intellectual property, have remained deadlocked since 2018.

The recent and hasty unilateral termination of bilateral investment treaties (BITs) by India with many EU member countries including Germany has complicated things further, leaving many European businesses worried about investment protection in India. As India prepares to resume FTA negotiations on all issues including investment protection, a recent landmark decision by the European Court of Justice (ECJ) — the highest court in the EU in matters of EU law — which has not attracted much attention assumes importance.

The ISDS mechanism.

The European Commission negotiated an FTA with Singapore from 2018 to 2018 covering a wide range of issues such as tariff reductions, intellectual property and investment protection including the investor-state dispute settlement (ISDS) mechanism. The ISDS provision in the EU-Singapore FTA gives investors a choice between bringing a dispute against a host state before the national court of the country where the investment has been made and submitting the dispute to international arbitration. The European Commission and the EU member states disagreed as to who had the competence to ratify the FTA. The ECJ decided that EU had the exclusive competence over almost all aspects of the FTA barring non-direct foreign investment — also known as portfolio investment — and the ISDS mechanism. In other words, for agreements containing non-direct foreign investment and/or ISDS provisions, EU member states enjoy mixed competence to approve such treaties. The court held that since the ISDS provision allowed the removal of the disputes from the jurisdiction of the courts of an EU member state, it could not be done without the consent of the member states.

This decision will impact the EU’s ongoing FTA negotiations, including with India. As Anthea Roberts of the Australian National University has argued, to honour the ruling, the EU might consider different options. First, it could decide to jettison the ISDS clauses in all its future FTAs. In other words, it may negotiate FTAs where disputes between investors and states would be resolved using the state-state dispute settlement (SSDS) mechanism. Given India’s protectionist stand on BITs and ISDS, as reflected in the 2018 Model BIT, India might be happy with this outcome. However, it is unlikely that the EU would totally abandon the ISDS system. Its FTA-text with Singapore and also the recently signed EU-Canada FTA reveals the EU’s preference for ISDS. Though, one major change is that the EU, in its FTA with Canada, has moved away from arbitration to a bilateral investment court system to settle investor-state disputes. Under this system, both countries nominate a roster of 15 tribunal members for a five-year period, and three members shall be randomly selected to serve on one tribunal. In addition to this, an appellate tribunal will be established to review tribunal decisions. Not just this, the EU is also keen to set up a multilateral investment court (MIC) with an appellate mechanism as reflected in Article 8.29 of the EU-Canada FTA.

Second, the EU could negotiate an FTA with ISDS provisions subject to the treaty being approved by all EU member states. However, this option is not feasible because all EU member countries might not ratify such an FTA. Third, it could negotiate the main FTA without an ISDS provision but make ISDS provisions a subject matter of an optional protocol provided this is permitted under EU law. The optional protocol could theoretically bind the EU’s partner country and only those EU member countries that ratify it and thus give their consent to the removal of investor-state disputes from their jurisdiction.

Challenges for India.

Assuming the EU exercises the third option and tailors the ISDS optional protocol on the lines of the EU-Canada FTA, India will have to think about its ISDS negotiating strategy carefully on three fronts. First, will India accept allowing foreign investors to submit cases to international tribunals without first resorting to domestic courts? The 2018 Indian Model BIT requires a foreign investor to litigate in national courts for at least five years before approaching an international tribunal. Second, is India prepared to accept the proposal of setting up a MIC and submit to the jurisdiction of such a court? This would mean that all BIT disputes would be settled by the MIC and not through ad hoc arbitration as India currently proposes in its Model BIT. There is a lot of merit in developing an MIC because it will help fight the vices of current ISDS system based on ad hoc arbitration. The MIC system will bring in tenured-judges with expertise in international investment law (IIL) unlike the party-appointed arbitrators, many of whom are not experts in IIL; usher in transparency in the ISDS system; introduce an appellate mechanism to correct errors of law made by tribunals of first instance, which is missing in the current ISDS system. Third, pending the creation of the MIC, will India accept the creation of a bilateral investment court system with tribunal members being appointed for a five-year period and with an appellate mechanism? The method of dispute resolution in the Indian Model BIT is based on ad hoc arbitration through party-appointed arbitrators though the possibility of creating an appellate mechanism is recognised.

India should use the ECJ decision to rethink the best way of approaching the ISDS, such as whether it should move forward with the option of negotiating for a MIC. As a democracy based on the rule of law, India should actively engage with the EU as part of its FTA negotiations, towards creating a robust and transparent international judicial system like the MIC that would protect foreign investment from state’s regulatory abuse.

Prabhash Ranjan is an Assistant Professor of Law at South Asian University. The views expressed are personal.

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