Bilateral agreements are more desirable than multilateral deals

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Since 1991, the narrative has been created that the policy of free movement of goods and capital across nations and amending IPR laws to suit investors is the panacea of all ills for developing countries. In India, too, it was thought that with such a policy, Indian industry would become competitive, flow of investment would improve, thus making the IPR regime stronger in favour of the owners that will help innovations.

However, a reality check shows that freeing trade in goods from tariff and non-tariff barriers, instead of making Indian industry generally more competitive, had led to deindustrialization in many sectors and a manifold increase in import dependence in general, leading to a constantly multiplying trade deficit, especially after the entry of China in the World Trade Organization (WTO). It is notable that India’s trade deficit increased from $6 billion in 2000-01 to $176 billion in 2018-19.

The decision to walk out of RCEP raises doubts about the future of free trade agreements (FTAs), including the FTA with the EU. We should not forget that in the past, opposition to India-EU FTA was similar to those of RCEP, such as on non-agriculture market access, agriculture, IPR, and investment.

The same arguments that were being given in support of RCEP are back in the narrative in favour of an India-EU FTA.

These include that the country cannot live in isolation, that this FTA would improve competitiveness of Indian industry and that the export potential of agriculture would also improve, and that IPR related clauses, which are actually proposed by EU, would encourage innovation.

The bizarre argument in favour of MTAs and RTAs is that they save nations from negotiating with other individual nations. However, 72.6% of India’s imports are from merely 15 countries and 60.5% of exports go to just 15 countries.

Therefore, making trade deals with major trading partners is not a big exercise. Rather, it gives us an opportunity to increase our trade relations with countries where our penetration is less, by making agreements with them and also helps us make diplomatic inroads there.

It is always a good idea to negotiate with our trade partners and have a trade deal, based on mutual needs, competitiveness and local requirements. The Swadeshi Jagran Manch has always been in favour of bilateral trade agreements rather than MTAs or RTAs. This approach has given us an opportunity to negotiate on the basis of mutual needs and cost benefit analysis on sound basis, rather than projections.

In the end, there is yet another argument added recently by globalists, that FTAs would lead to India becoming a part of the global value chain, which again is generally fallacious. We must not forget that the essential condition for India becoming a part of the global value chain is not FTAs but ease of doing business. We need to make special efforts by carefully making agreements with our trade partners wherever possible and entering into bilateral agreement and make special efforts to improve our competitiveness. We need to work out a deal that is a win-win for all sectors, including manufacturing, agriculture, and dairy, and all people including workers, farmers, and small businesses and not merely corporate.

Ashwani Mahajan is national co-convener of the Swadeshi Jagran Manch.



via LiveMint

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