Round The World
New Delhi, 7 April 2015
Geo-Politics Of Trade
INDIA MUST CARVE NICHE
By Ashok B Sharma
In today’s multi-polar world several
key actors are engaged in defining their spheres of influences. The two main
pillars in this game of evolving geo-politics are trade and security. While
geo-politics is the driving force, geo-economics is being designed to be its
base. A number of mega regional trade arrangements (RTAs) are being attempted
to be floated by the main actors. Such attempts are likely to squeeze India’s space
for developing its own security and trade architecture and hence it needs to
step up its diplomatic engagements with prospective partners for its security
interests and align itself with combinations or trade blocs that may prove conducive
to its interests.
The global slowdown that resulted
from the collapse of Lehman Brothers in the latter half of 2008 in US caused
much redrawing of trade engagements in the world. The European Union, which is
struggling to deal with the hangover of its Sovereign Debt Crisis, is unable to
come out of recession as the situation is further aggravated due to its
involvement in the Ukraine
crisis. Comparatively, President Obama has been successful in pulling out US
from the recession and the country is growing at 3.1% per annum. The EU-15
countries are growing slowly at 1.2%.
The EU has become more protectionist
in trade, particularly with the developing world and as the negotiations in the
WTO is in a deadlock, it has chosen to align itself with US in Trans-Atlantic
Trade and Investment Partnership (TTIP). The US floated the concept of
Trans-Pacific Partnership (TPP) and considers TTIP a companion agreement to it.
Washington’s
interest in Asia-Pacific is not new. The Obama Administration’s “rebalancing in
Asia-Pacific” and “pivot” to the region is a hangover of South-East Asia Treaty
Organisation (SEATO). With the global economic pole gradually shifting to
Asia-Pacific the western powers have become more interested in the region.
The TPP led by the US has 12 participating countries --Canada, Mexico,
Peru, Chile, Malaysia,
Singapore, Brunei, Vietnam,
Japan, Australia and New Zealand. It seems to be at the
most advanced stage of development and is likely to erode existing preferences
for Indian products in these markets and will put a greater burden on
compliance by Indian industry and service sector. In fact, the TPP is likely to
have stringent environmental, labour intellectual property norms that may be
impractical for compliance by India.
The TPP is designed to scuttle the
earlier proposed Regional Comprehensive Economic Partnership (RCEP) with the
centrality of ASEAN. Apart from 10 ASEAN members the ASEAN FTA partner
countries like China, India, Japan,
South Korea, Australia and New Zealand are associated with it.
The overlapping membership of TPP and RCEP shows that the move for TPP is an
effort to scuttle RCEP. The ASEAN is slated to move towards a common economic
community by January 1, 2016 and subsequently towards a political security
community and socio-cultural community. The RCEP arrangement will be most
conducive to India’s
interests and it should push for its early conclusion and always continue to
stress upon the centrality of ASEAN.
Apprehending exclusion from the mega
trade arrangements, China
floated another concept of Asia-Pacific Free Trade Area in the last APEC
Summit. To add to its economic muscle, China
has also launched Asia Infrastructure Investment Bank in which India is also a
member. Beijing’s interest in the region is well
known with its extension of “String of Pearls” in the Indian
Ocean, concept of One Belt One Road, Maritime Silk Route, BCIM Corridor. Also China’s aggressive postures in South China Sea
like Nine Dash Lines, Air Defence Identification Zone, creation of artificial
islands pose problems for Indian oil asset off the coast of Vietnam.
Comparatively, India’s plans
for connectivity in the region like India-Myanmar-Thailand
Trilateral Highway, Kaladan Multi-modal transit
project, opening up more trading points at India-Myanmar border are moving at a
very slow pace. China
is an emerging power and it is natural for it to have its own ambition in the
region. It is time for India
to wake up from its deep slumber and engage with the countries in the region
for collective security and trade.
Round The World ...2
Russia which has recently
floated the Eurasian Economic Union has plans to play an effective role in the
region. India’s plan to use
Chabahar port in Iran for
rail and road connectivity to Afghanistan
and beyond to Central Asia and Russia
is yet to reach its full potential. The alternate route called International
North-South Transport Corridor (INSTC) from Nhava Sheva port in Mumbai to
Bandar Abbas and Amirabad in Iran
to Astrakhan in Russia
for onward shipment to Moscow
is yet to be operationalized.
Apart from addressing infrastructure
problems, India
should step by efforts to be part of the global value chain in a big way.
Direct import of rough diamonds from Russia for processing in the
country for re-exports, import of crude oil and processing it in refineries for
re-export of petro-products are successful examples of participation in global
value chain. In bilateral and regional trade arrangements rules of origin
should be eased and simplified to locate India effectively in global a
regional value chains. Imports should be facilitated for specific raw
materials, intermediates and capital goods for stimulating value added domestic
manufacturing.
Careful market strategy should be in
place to promote exports of products in which India has competitive advantage
like services, pharmaceuticals, gems and jewelry, agriculture, plantation and
marine products, leather products and textiles, handicrafts, auto parts and
small cars. India
should increase exports of high value agri products like processed food and
organic food. Care should be taken not to approve GM food crops for commercial
cultivation in the country as this would affect India’s exports to EU. Exports of
high value engineering products, electronics, medical devices and equipment,
defence products can be viable when ‘Make in India’ programme becomes a reality.
Project exports to developing and least developed countries should be promoted
in a big way.
Diplomatic efforts should be in
place to deal with major players. IPR issues, immigration and skilled related
policies of US, demanding market access for services in Canada, bypassing NAFTA
rules for trade with Canada and Mexico, EU’s SPS quota regime and data
exclusivity norms, China denying Indian pharma, IT and ITES and agro exports,
sorting out delays, infrastructure problems, non-tariff barriers, SPS regime
with Russia are some of the issues India needs to take up with relevant
countries to boost trade relations.
As the developed nations, particularly
EU are in recession, India needs to diversify its products for exports and
expand its bases in new markets in Latin America and Caribbean, Africa, non-EU
countries in Europe, Eurasia including Russia, Pacific countries including
Australia and New Zealand, West Asia, South-East Asia, South Asia and East
Asia. These efforts can help India
to raise its exports from $465.9 billion to a considerably higher level, if not
at $900 billion by 2019-20 as envisaged in the new Foreign Trade Policy.
Bilaterally dealing with countries in the proposed mega regional trade
arrangements, in which India may not be a part, can also help in maintaining
its position in global trade dynamics. ---INFA
(Copyright, India News and Feature
Alliance)
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