negotiated the Mutual Recognition
Agreements (MRAs) – aimed at
facilitating the movement of IT and
other service professionals–
anticipated gains have not yet
materialized because of weak
enforcement of MRAs.
In a paper published in EPW
(Novembeer 16 2019) Kala Dhar
concluded: “We analysed the
pattern of trade with ASEAN, RoK
and Japan, India’s FTA partners
who are part of the RPCs, as well
as China, until recently, India’s
largest trade partner. This analysis
showed that India was unable to
utilise the market access
opportunities provided by our FTA
partners since exports have
remained sluggish. Exports to China
remain virtually stagnant until the
previous financial year, when some
growth was observed. Unless this
constraint is addressed seriously,
India’s participation in any FTA
would not serve the interests of the
country’s stakeholders”.
India has now opted out of the
RCEP negotiations based on the
principle of protecting the Indian
interests. Because most of the FTAs
signed or under negotiations
contained similar frame work on
investment, trade and services as
that of RCEP. Contrary to the
experience with FTAs, it is not ready
to abandon its policy of pursuing
free trade agreements. At present,
India is negotiating as many as 15
free trade agreements (including
with Australia and New Zealand)
while another 12 FTAs are proposed
/ under consultation and study.
Currently, bilateral discussions
are underway between India and
the US on a limited (“interim”)
agreement in the near-term and a
highly ambitious and broader FTA
over the longer-term. The broader
FTA may also cover a wide range of
issues, including trade in services,
IPRs, e-commerce, and investment.
As the negotiations on a standalone
January - 2020
India-US bilateral investment treaty
have not progressed, both trading
partners may incorporate an
investment chapter under the
broader FTA.
In the interim agreement, the
US would like India to consider
lower tariffs on ICT items and
agricultural products besides
removing price controls on medical
devices such as stents and knee
implants whereas India would like
the US to immediately restore
benefits to Indian exporters under
the Generalised System of
Preferences that was terminated by
Trump administration in June 2019.
The same will the case when
Indian and European trade
negotiators resume negotiations on
the long-pending India-EU free
trade agreement.
There are at least three sets
of provisions in the investment
chapter that could have adversely
affected India. The first is the asset-
based definition of investment,
which allows any form of participation
by foreign companies to be
recognized as investment. The
second is indirect expropriation,
which gives the foreign investor
opportunity to challenge public
policy formed by the government of
host country. The third is investor-
state-dispute settlement mechanism,
under which the foreign investor
can launch dispute against India in
a private international tribunal.
All the three components go
against the interests of our country.
Leaked documents reveal that a
compromise was resached at the
final round of negotiations
(September 2019) for not including
the ISDS in the present agreement.
However, under the work program,
RPCs agreed to enter into
discussions on ISDS provision
within two years after the entry of
force of the RCEP agreement and
conclude them within three years
from the start of discussions. The
remaining two components were
agreed to include in the document.
The government of India
adopted the revised “Model Text for
the Indian Bilateral Investment
Treaty” (BIT) in 2015, basing on
which India has to negotiate
investment agreements. The
investment chapter of RCEP goes
against the framework of BIT.
During the RCEP negotiations, the
Indian representatives have
agreed to the investment chapter
as the news reports suggested.
At a time when the Indian
economy is passing through a
severe recession with falling
industrial production, agrarian
distress, and a severe unemployment
crisis, the government’s decision
to come out of RCEP negotiations
may appear to have taken to protect
the domestic producers. But the
reality is otherwise. The US
imperialism has been increasingly
drawing India into is hegemonic
designs in Asia aimed at Isolating
China and formed as axis with
Australia, Japan and India. The US
imperialism cannot stay as a mute
spectator when some negotiations
are going on which makes the
Indian market accessible to China.
The US imperialism used a proposal
to have ‘interim’ trade agreement
as a bait for India to take and
pressurised it to come out RCEP.
The Indian government complied
with the US wishes.
RCEP is not the last FTA. Many
more proposals to have bilateral
and regional trade agreements
would come before India. What is
needed is comprehensive policies
that promote the domestic market
and protect the interests of people
and country. It is the duty of all
patriotic, democratic and revolutionary
forces to oppose the capitulation of
Indian ruling classes and their
government to US imperialism and
wage struggle to protect the interest
of the people.
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