Abstract
The World Trade Organization (WTO) framework, after inception in 1995, was expected to deepen market access across member countries and facilitate development. However, slow progress of the Doha round of negotiations, partly owing to the consensus requirement, has eventually lowered the attraction of the multilateral trade reform process to a large extent. On the other hand, the possibility of realizing tariff and other non-tariff barriers (NTBs) reforms through smoother negotiations has enhanced the acceptance and hence demand for regional trade agreements (RTAs) over the last decade. Both the developed and developing countries (including India) have actively participated in the deepening regionalization drive.
In recent times, the simple tariff and NTBs reforms are slowly giving way to far deeper integrations encompassing trade facilitation measures, competition policy, investment agreement, government procurement policies, TRIPS-Plus measures, mutual recognition agreements (MRAs) on technical standards, labour and environment provisions, and so on. Consequently, the negotiation process is becoming complicated, and compliance by the developing countries might become a major bone of contention. In particular, the mega-regional agreements, namely Trans-Pacific Partnership (TPP) and regional comprehensive economic partnership (RCEP) involving both developed and developing countries, are exposed to such challenges. On the one hand, while the comprehensive agreements encompassing these provisions and covering a wide geographical area would be instrumental in strengthening the global value chains (GVCs) and international production networks (IPNs), protecting the domestic stakeholders in a later stage in the light of regional commitments may in future emerge as an area of concern. The RCEP negotiations, which involve India as a constituent member, is still in progress with an undercurrent of such concerns, and the original deadline has been missed. The details of the RCEP provisions are still not in the public domain. The TPP was signed in 2016, but the USA decided to pull out in 2017 on the ground of protecting domestic interests, which reduced the attractiveness of the trade bloc. The TPP provisions are presently accessible and compared with other free trade agreements (FTAs).
While presently Japan is playing a key role in pushing the bloc for deepened trade relations, the TPP remains quite relevant in a wider context. First, while it may opt to stay out of the bloc for domestic compulsions, the USA may use the TPP template for negotiating other bilateral FTAs. Second, the TPP template, owing to the comprehensive nature of the same, may be used by WTO as well as other FTAs for future negotiations. It is therefore crucial for Indian policymakers and negotiators to understand the implications of the template and their compatibility with domestic legal and institutional mechanism. The volume edited by Das and Singh, an attempt to map the provision-wise possible conflicts between the TPP template and Indian scenario, is therefore a timely contribution to the existing literature.
The book has 13 chapters including the introductory and concluding ones. The broad conclusion emerging from the volume is that India should not embrace a TPP-type template in any of its ongoing or future FTAs or mega-regional negotiations owing to the following reasons. First, TPP does not incorporate strict provisions for the reduction of agricultural subsidies. In other words, subsidy-laden farm products from partner countries may enter the Indian market hassle-free and offer challenge to local farming community, already suffering from several bottlenecks. The TPP further follows the International Union for the Protection of New Varieties of Plants (UPOV) principles, which are heavily skewed in favour of the rights of plant breeders. In other words, the right to store, sell and use seeds by the marginal farmers practising subsistence agriculture may come under significant challenge by foreign multinational seed corporations. Second, the deep tariff-reduction commitments (i.e., zero-duty structure) in a manufacturing sector may significantly jeopardize the ongoing expectations from the ‘Make-in-India’ scheme, as the Indian small and medium enterprises (SMEs) would face a stiff competition in their nascent stage. The problem is compounded by India’s lack of price competitiveness in a wide range of product categories, while the potential partners (e.g., Japan, Vietnam) include efficient suppliers both in capital and labour-intensive product segments. Maintaining as an ‘open’ regime towards remanufactured goods is another problematic area for the country. Third, TPP follows a ‘negative list’ approach in contrast to the WTO negotiations on services following the General Agreement on Trade in Services (GATS) provisions, based on a ‘positive list’ approach. It would be very difficult for India to correctly predict all possible forms of challenges for domestic service subsegments and place them under a negative list at the negotiation stage. Furthermore, the TPP template commitments prohibit member countries from erecting additional measures post-entry, underlining the inability of countries to support domestic service suppliers from foreign competition in case of unexpected developments. Moreover, India would require to bring several domestic legal provisions (e.g., financial services, professional services) in line with TPP commitments. Fourth, TPP prohibits member countries from using tariff on digitized products on the one hand and application of localization requirements on platform-based and digital entrepreneurs (i.e., building physical infrastructure) on the other hand. As a result, some entities may never establish in India, but the host country of the corporate in question might enjoy access to Indian consumer’s data on security ground. Both the provisions have far-reaching consequences. Fifth, given the TPP provisions using a stronger intellectual property right (IPR) mechanism (lower bar on patentability, data exclusivity even in the absence of patent protection, registration of scent marks, deeper copyright provisions, etc.), membership in this framework would considerably affect the interests of Indian consumers, for example, increased drug price, denied entry of new generics in the market. Sixth, as there is no harmonization requirement for standards under TPP, the proliferation of private standards would end up imposing stringent compliance requirements on Indian players. Seventh, the TPP provisions on labour are bound to raise compliance cost in India, with consequent competitiveness challenges, in effect nullifying India’s trade gains through tariff reforms. Eighth, India is not a major player in global government procurement market and hence is not likely to benefit from the associated reforms in other countries. However, the TPP-mandated opening up of the domestic procurement market may limit the operation and expected sales of Indian SMEs in several sectors, thereby negatively impacting all upstream activities. Last but not the least, the TPP membership may prohibit the country from providing much-needed infusion of capital in sick public sector undertakings (PSUs), with employment and other repercussions.
Judging all angles, the book advises against joining in TPP-type negotiation template, but advocates membership in Asia–Pacific Economic Cooperation (APEC) only if the country feels ready to implement various APEC-initiated reforms voluntarily. In this context, the present volume contributes significantly to the existing literature by considering all the potential challenges for India within the TPP-type framework and should be an important point of reference for policymakers, negotiators and researchers alike.