As RCEP shows, India trade talks are far from over
Indian negotiators are understandably chuffed about the victory at the WTO, with the US agreeing to support India’s position on food subsidies. So, from a situation where India was seen as the spoiler when it came to the first deal the WTO was going to achieve—on trade facilitation—in two decades, India was seen as the hero. Not only did it stand up for the rights of developing countries such as itself, it managed to convince the US of the morality of its stance. While that is a great victory, life moves on and India’s trade negotiators are now confronted with that reality. There are, at the moment, two big trade negotiations going on. The first is the Trans-Pacific Partnership (TPP)—related to the TPP is the Transatlantic Trade and Investment Partnership, or TTIP—and the Regional Comprehensive Economic Partnership (RCEP). While India is not part of the TPP, the RCEP is a round of talks involving 16 countries which account for around 40% of global trade.
In neither of these trade rounds are standards going to be set by a multilateral body like the WTO; they are going to be based on mutual negotiations and any country that is not part of the negotiations has to opt out—it cannot, as in the WTO case, hold back negotiations for the rest. So, chances are, if India is to gain from the RCEP where China is the dominant player as the US is in the TPP, it will have to be prepared to make some major concessions in sectors that Indian negotiators have regarded as sensitive so far and have not been keen to open up. This could mean opening up certain sectors by cutting down on tariff barriers and, in the case of the TTIP, it could imply opening up new investment areas. All these negotiations are about, at the end of the day, creating global value chains and even if they are about trading, investments will flow in the same direction. And to deal with the implications of the trade/investment deals, India cannot afford to lose any more time in making its industry/services globally competitive.