India reposes faith in WTO's multilateral trading system, sees no threat from regional pacts

VISHAKHAPATNAM: India has reposed its faith in the multilateral trading system of the World Trade Organization, dismissing any threats from the regional trading arrangements such as the Trans-Pacific Partnership ( TPP).

Commerce minister Nirmala Sitharaman on Monday said that India is fully committed to the WTO. Shishir Priyadarshi, director at the WTO, on his part said that the debate over multilateralism versus regionalism is no more relevant as in the current scenario both are going to stay.

Conclusion of the TPP, which has brought common and higher standards for nearly 40 per cent of the world economy, has made India cautious of losing market share in the US to countries such as Vietnam. There are also apprehensions over issues related to labour, environment and investment protection gradually creeping into the WTO. India’s concerns have increased because seven countries in TPP are also negotiating with it under the Regional Comprehensive Economic Partnership agreement.

"We strongly believe in multilateralism and that is why we are fully committed to WTO. It is also sometimes a bit of a challenge that issues don’t move fast enough, that countries don’t feel confident that any agenda can get within a time period, to its logical conclusion. This is one of the arguments held against Doha developmental agenda which was brought in nearly 15 years ago," Sitharaman said at the CII Partnership Summit.

The minister’s comments came almost a month after the 162-member WTO failed to reaffirm the Doha Development Agenda, India’s main demand. This has led to a "lot of frustration" among emerging countries and LDCs (least developed countries) which are "saying why are issues of importance for developing countries not moving fast enough," she said. Priyadarshi said at the same event that the challenge is to make the scenario of multilateralism and regionalism a win-win situation for the large group of countries including small economies and LDCs. The minister questioned the basic premise of the 12-member TPP and asked which region does it do justice to as it has countries from across the world. "Is it really regional trade agreement or are group of countries picking and choosing a basket of countries saying we are having an agreement with them?" said Sitharaman.

To counter this, she said India will form special purpose vehicles to help domestic companies set up facilities in Cambodia, Laos, Myanmar and Vietnam (CLMV) to cushion India from the impacts of regional trade agreements.

Allaying industry’s fears that India might get isolated in the TPP, she said that no country has ratified it as yet and many have been given 20 long years to adjust to the core principles of the agreement.

"India is not being kept out and the nature of what is happening in some of the agreements like TPP is much less about trade and much more about other things. There is nothing for us to worry," she said.


Free Trade Agreements

At a time when the government is in talks to have free trade agreements (FTA) with the European Union, Australia and Canada, Sitharaman said there is a need to review the pacts signed during the term of the previous government. "We have signed trade agreements with some of the South Asian countries before this regime. Industry has been voicing their concerns about FTAs which have been signed much before this regime came in. We need to review them. We need to renegotiate them," the minister said.

Sitharaman said this is the case as many Indian manufacturers think FTAs have an adverse impact on them. The government is trying to bring back "core business that has left India," she said referring to concerns raised on trade pacts with Japan and Korea.

(The correspondent was in Visakhapatnam at the invitation of CII)