The Trans-Pacific Partnership, Global Trade, and India

There’s a lot of heat and noise in Indian public debate and discussion circles right now. While it’s good to see several issues hit the limelight, there are other important pieces of news that are being missed out, or confined to the wings. One such piece of news emerged this week, when the US and New Zealand governments released the full text of the Trans-Pacific Partnership (TPP) on Thursday. While New Zealand placed the full text on its Foreign Affairs and Trade Ministry, the US Government oddly chose to publish the full text through a Medium account (I’m not sure what to make of that).

For those of you not in the know, there are currently three big trade agreements being negotiated between a large number of nations in the world. The first is the Trans-Pacific Partnership or TPP, negotiated between the United States, Canada, and several Asia-Pacific nations such as Japan, Australia, New Zealand, and Malaysia. The second is the Regional Comprehensive Economic Partnership or RCEP, under negotiations between China, India, Japan, South Korea, and several ASEAN nations. The third is the Transatlantic Trade and Investment Partnership or TTIP, being negotiated between the United States and the European Union. As you can see, (a) several countries like Japan are involved in more than one agreement and (b) the three agreements cover a huge part of the world. The TPP alone may end up directly influencing 40% of world trade.

What do these agreements do? Firstly, there isn’t too much information in public. Negotiations on these agreements have been going on for years but apart from this week’s release of the TPP text, most of these negotiations are being conducted in secret (not a good sign). However, what is certainly known is that these agreements seek to create what are called “preferential trading zones”. Some people mistake them for “free trade zones” but as Vivek Dahejia pointed out in Livemint last week, they needn’t necessarily promote free trade. Preferential Trading Zones are essentially trading blocs, where trade between member countries get preferential treatment over trade from other countries.

Is this a good thing or bad? It’s hard to say at this point because the scope of such agreements are so vast that good and bad eventually depends on who you are and where you stand with respect to the agreements. For instance, Bernie Sanders, the US Presidential Candidate, is opposed to the TPP because he’s worried that American jobs will get outsourced to member countries with lower wages. Now, if this scenario plays out, it’s certainly bad for the United States but great for the member country (at least temporarily).

Or else, take the provisions on information and data. In Canada, there are fears that TPP provisions will end up allowing Canadians’ personal data to be transferred to American servers, effectively bringing it under US surveillance. But if one of the other member countries was cracking down on some online dissidents – some of these dissidents may have loved the idea of having their personal data out of their own government’s servers. It’s an extreme example (and one I think unlikely – there are sure to be other provisions preventing such scenarios) but it illustrates the polarising nature of these agreements. The vast scope of items they cover will end up affecting different people differently.

I haven’t gone through the text of the TPP myself (the whole thing is 6000-odd pages long and I don’t have enough time to go through it individually) but initial signals coming out into the media aren’t very encouraging. For example, environmental groups have pointed out that TPP provisions make no mention of climate change, while groups working on health, and access to medicine are concerned that prices of life-saving drugs are likely to escalate under the TPP.

India is not (yet) a signatory to the TPP, nor are major countries such as China, Brazil and Russia. However, there are two points to be noted. First, the creation of a TPP Trading Zone is likely to have huge impacts on trade in other parts of the world. Regardless of whether India is a member or not, its trade relations stand to be affected. Second, India is currently conducting negotiations for membership in RCEP, that seeks to create a similar trading zone in Asia. Though the text of RCEP is not available, it’s likely that the provisions will be similar to those of the TPP.
The TPP is currently awaiting approval from the parliaments of their respective countries. If successful, it’s likely to be one of the biggest factors to affect global trade since the World Trade Organisation (WTO) was set up in 1995. In fact, the evolution of the TPP has some of its roots in the failure of the Doha Round of WTO negotiations. India had played a significant role in the Doha Round, earning a reputation as a deal-breaker, while trying to force the US and Europe to cut agricultural subsidies. TPP negotiations probably gained ground this decade due to the perceived stalemate under Doha.

Ultimately, depending on how successful these agreements are, a lot of changes are likely to take place in the Indian economy. Much of the possible future is still uncertain and a lot of people have different opinions. It’s quite likely though that many of the debates we are having today will take on different colours, including the trade-offs between environment and development, human rights, poverty alleviation, safety standards, and net neutrality. Whether these will be positive changes or not remain to be seen.

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