Broader implications of trade agreements

Broader implications of trade agreements

Proposed bilateral investment treaties (BITs) and other such bilateral free trade agreements (FTAs) between India and several countries have drawn much attention in the last ten years. The trend is not without precedent.
 In 1991, as a direct consequence of the economic ‘reforms’ India had begun to open up for international trade and investment.
 Amongst the first things undertaken by the then Finance Ministry (under Manmohan Singh), as part of the new foreign policy was designing a standard bilateral investment promotion and protection agreement (BIPA). As per the finance ministry, India has so far signed over 83 BIPAs as of December 2013. These are essentially agreements to promote and protect the interests of investors in the country and hope to thereby receive such treatment in reciprocity overseas.
 But these have real consequences for people and the BITs/FTAs are international agreements that impose legally binding rules on one country’s treatment of investors from another country.

They have far-reaching implications beyond just trade and economic relations. For they impinge on areas including labour, agriculture, environment, state-owned enterprises and domestic innovation policies.
 So voters have to be able to see through the rhetoric on these issues in election manifestos and ask some straight questions on how a political party will tackle the ‘WTO-plus’ BITs/FTAs.   For that will determine how their chosen ones will be able to deliver on popular promises. Stronger agreements The first generation BIPAs are now being replaced by stronger, tighter BITs/FTAs that demand a much higher level of investor protection.
 These second generation trade agreements go well beyond the demands that the World Trade Organisation (WTO) puts on its members.

One that warrants mention here is the one in which GoI is in talks with the economic grouping of 27 member countries of the European Union (EU).

The EU-India bilateral trade and investment agreement (BTIA) is an ongoing negotiation commenced under the UPA in 2007.

EU will want to pick up the talks after a new government is in seat in India. What the Congress-led Government is doing through one agreement, the BJP did bit by bit.

Several of the BIPAs were signed during the Vajpayee regime by the then BJP Finance Minister Yashwant Sinha in 1998. 

Two processes of reviewing India’s BITs/FTAs ran in parallel last year.

One, the Department Related Parliamentary Standing Committee on Commerce, headed by Shri Shanta Kumar for preparation of a report to Parliament on the challenges and opportunities on FTAs and another a review by the GoI of its BITs’ texts and strategy.

Interestingly, precisely a year ago in April 2013, senior BJP leader Murli Manohar Joshi in a press statement had on behalf of his party came out openly against the EU-India FTA. The BJP then demanded for a comprehensive debate in Parliament on all FTAs entered into and especially on EU-India FTA, asking for the negotiating text to be made open and impact assessment studies of FTAs particularly the EU-India one.
 It had demanded that the government should not go ahead without a political consensus. It is notable that neither political parties nor their election manifestos make their stand on BITs/FTAs perspicuous.

The Congress equivocation is in its broad language of enhancing bilateral relations and commercial ties.
 It further states that it will ‘strengthen multilateral trade systems and investment flows’. But is silent on where bilateralism fits into such a frame.  The BJP Manifesto 2014 talks of economic freedom and that it will ensure a conducive, enabling environment making ‘doing business in India easy.
 On its to-do list to ‘revive Brand India’, trade is one of them.
  It is to be seen how its Guiding Principles on Foreign Policy will not be led by big power interests.|

Question is does the global economic system and the forces behind it give either political party a choice, or is there mere posturing in taking tough stands.

More importantly, does either of them have the political will to forge ahead an alternative?