The idea of co-operation in South Asia was discussed in at least three conferences: the Asian Relations Conference held in New Delhi on April 1947, the Baguio Conference in the Philippines on May 1950 and the Colombo Powers Conference held in Sri Lanka in April 1954.
Then in 1983, the international conference held by Indian Minister of External Affairs P.V. Narasimha Rao in New Delhi, the foreign ministers of the inner seven countries adopted the Declaration on South Asian Association Regional Cooperation (SAARC) and formally launched the Integrated Programme of Action (IPA) initially in five agreed areas of cooperation namely-
- Rural Development,
- Health and Population Activities.
Officially, the union was established in Dhaka with Kathmandu being union’s secretariat-general. The first SAARC summit was held in Dhaka on 7–8 December 1985 and hosted by the President of Bangladesh Hussain Ershad. The declaration signed by King of Bhutan Jigme Singye, President of Pakistan Zia-ul-Haq, Prime Minister of India Rajiv Gandhi, King of Nepal Birendra Shah, President of Sri Lanka JR Jayewardene, and President of Maldives Maumoon Gayoom.
Observer Countries: States with observer status include Australia, China, the European Union, Iran, Japan, Mauritius, Myanmar, South Korea and the United States.
- The objectives of the association as defined in the SAARC Charter are:
- To promote and strengthen collective self-reliance among the countries of South Asia,
- To contribute to develop mutual trust, understanding and appreciation of one another’s problem,
- To promote active collaboration and mutual assistance in the economic, social, cultural, technical and∙ scientific fields,
- To strengthen cooperation with other developing countries,
- To strengthen cooperation among themselves in international forums on matters of common interest,
- To cooperate with international and regional organizations with similar aims and purposes.
The South Asian Association for Regional Cooperation (SAARC) is an economic and geopolitical organisation of eight countries that are primarily located in South Asia or the Indian subcontinent.
The combined economy of SAARC is the 3rd largest in the world in the terms of GDP(PPP) after the United States and China and 5th largest in the terms of nominal GDP. SAARC nations comprise 3% of the world’s area and contain 21% (around 1.7 billion) of the world’s total population and around 9.12% of Global economy as of 2015.
The SAARC policies aim to promote welfare economics, collective self-reliance among the countries of South Asia, and to accelerate socio-cultural development in the region.
The SAARC has developed external relations by establishing permanent diplomatic relations with the EU, the UN (as an observer), and other multilateral entities. The official meetings of the leaders of each nation are held annually whilst the foreign ministers meet twice annually. The 18th SAARC Summit was held in Kathmandu from 26–27 November 2014.
India being the world’s 3rd & 7th largest Economy of world in GPP(PPP) & GDP(Nominal) terms respectively as well as world’s fastest growing major Economy, plays an important role in functioning of SAARC. India makes up over 70% of the area and population among these eight nations.
Journey so far
SAARC Visa Exemption Scheme–
The SAARC Visa Exemption Scheme was launched in 1992. The leaders at the Fourth Summit (Islamabad, 29-31 December 1988), while realizing the importance of having people to people contacts, among the peoples of SARC countries, decided that certain categories of dignitaries should be entitled to a Special Travel document, which would exempt them from visas within the region. As directed by the Summit, the Council of Ministers regularly kept under review the list of entitled categories.
Currently, the list included 24 categories of entitled persons, which include Dignitaries, Judges of higher courts, Parliamentarians, Senior Officials, Businessmen, Journalists, and Sportsmen etc.
SAARC Disaster Management Centre–
SAARC Disaster Management Centre (SDMC) was set up in October∙ 2006 at the premises of National Institute of Disaster Management in New Delhi. The Centre has the mandate to serve eight Member Countries of South Asia Association of Regional Cooperation (SAARC) – Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka – by providing policy advice and facilitating capacity building services including strategic learning, research, training, system development and exchange of information for effective disaster risk reduction and management in South Asia.
The Centre is a sleek body of professionals working on various dimensions of disaster risk reduction and management in South Asia. The Centre is networking through the National Focal Points of the Member Countries with the various Ministries, Departments and Scientific, Technical, Research and Academic institutions within and outside the Government working on various aspects of disaster risk reduction and management.
SAARC Chamber of Commerce & Industry–
Established in 1985, SAARC had hitherto avoided including core economic issues in its programme, but in the wake of the desire for a SAARC Chamber of Commerce and Industry, the SAARC Secretariat commissioned a study on Trade, Manufactures and Services in 1988. The study was completed in 1991 and strongly supported to establish a SAARC Chamber of Commerce and Industry to bring about improvement in the business environment disseminate information about potential tradable goods and identify joint ventures in the SAARC region. The objectives of the “SAARC Chamber” includes to encourage Trade, Service, Industry, Small & Medium Enterprise, Agriculture, Intra-Regional through creating strong business linkages amongst the entrepreneurs of the region of South Asia.
SAPTA = SAARC Preferential Trading Arrangement (SAPTA) was signed in 1993 and entered into force in 1995. The Agreement reflected the desire of the Member States to promote and sustain mutual trade and economic cooperation within the SAARC region through the exchange of concessions. SAPTA had no significant impact on intra-regional trade of SAARC -It was firstly, one of the least ambitious trading agreements. The agreement provided for a positive list; the trade of the items on positive list could be regulated. There was a lack of commitments on tariff reduction; it was a completely voluntary arrangement.There was no clarity on rules of origin. There was no provision for a Dispute Settlement Mechanism.
South Asian Free Trade Area–
The Tenth SAARC Summit (Colombo, July 1998) decided to set up a∙ Committee of Experts (COE) to draft a comprehensive treaty framework for creating a free trade area within the region, taking into consideration the asymmetries in development within the region and bearing in mind the need to fix realistic and achievable targets. The SAFTA Agreement was signed on 6 January 2004 during Twelfth SAARC Summit held in Islamabad, Pakistan.
The Agreement entered into force on 1 January 2006, and the Trade Liberalisation Programme commenced from 1 July 2006. Under this agreement, SAARC members will bring their duties down to 20 per cent by 2009. In 2012, the SAARC exports increased substantially to US$354.6 billion from US$206.7 billion in 2009. Imports too increased from US$330 billion to US$602 billion over the same period. But the intra-SAARC trade amounts to just a little over 1% of SAARC’s GDP.
SAARC Satellite is a proposed communication-cum-meteorology satellite by Indian Space∙ Research Organisation (ISRO) for the SAARC region. Prime Minister of India Mr. Narendra Modi mooted the idea of a satellite serving the needs of SAARC member nations. In his visit to Nepal in August 2014, Narendra Modi announced developing a satellite to assist India’s neighbors.
Framework agreement on cooperation in power sector– During 18th SAARC summit, foreign ministers of all∙ the eight countries signed the framework agreement on cooperation in power sector which will ensure electricity trading through grid connectivity.
Outcome Analysis and Challenges
Overall, there have been no major breakthroughs at the summit and no significant move on fighting∙ terrorism which was presented as a main concern by most of the SAARC leaders, particularly India, Afghanistan, and Nepal.
Also, there were no important decisions on flow of investments and financial arrangements to push the economies towards “deeper regional integration”, which was projected as the main theme of the recently held 18th summit in Kathmandu.
However, the summit did set the target of forming a regional economic community in the coming 15 years,∙ but for now, this plan sounds more rhetorical than concrete, just like all the talk about removing poverty, fighting terrorism and speeding connectivity.
The Kathmandu Declaration, which the summit produced, lists a lot of other lofty goals like developing a∙ “blue economy” (ocean-based economy) for the region, monitoring cyber-crimes, good governance, reinforcing cultural heritage, universal health coverage, food security, etc. It remains to be seen how effective the actions and implementation on these promises will be.
Lack of progress– The SAARC’s activities has been sluggish and irritatingly slow. In its 30 years of existence, it∙ failed to hold 11 annual summits for political reasons, both at the bilateral and internal levels.
India’s Stand– India has described the 18th summit as a success, at least for its umbrella agreement on power sharing. However any hard-headed assessment of the summit may not give much satisfaction to Indian policy makers, particularly for the failure to clinch the key connectivity proposals. India’s Prime Minister Narendra Modi has made “neighbours first” as the cornerstone of his foreign policy. He invited all the SAARC neighbours to witness his oath taking in New Delhi on May 26. At the Kathmandu summit, PM Modi pitched for “reinvigorating’ and “revitalizing” SAARC. In his address at the summit, he encouraged neighbours to join India’s economic opportunities and growth. On the issues of trade, transit, visas, investments, education, health, communication and space technologies, he promised to help its South Asian neighbors. India also avoided raising any controversial and sensitive issues that may irritate others.
Its reluctance to come on board on the connectivity agreements appears to be a∙ response to India breaking promised bilateral talks. It also signaled its persisting resistance to India expanding its economic engagement with Afghanistan. While transportation of goods and passenger by road between India and Afghanistan through Pakistan is opposed by the associations of truck and bus operators in Pakistan for the fear of losing business, the real difficulty arises from strategic calculations of blocking India from emerging as a competitor to Pakistan in Afghanistan.
China and SAARC
Pakistan has been pleading for China’s greater role in South Asia. Most of the other∙ smaller South Asian countries are also supportive of elevating China’s status from that of an observer, to either a full member or a dialogue partner.
The Kathmandu Declaration accepted that observer countries of SAARC may be engaged in “demand driven priority areas”. Almost all of India’s neighbours are attracted to China, both for the lure of greater economic resources, as well as strategic potential of keeping India in “balance”. China has also been keen to play a greater role in South Asia. Its South Asia policy is driven by a sense of vulnerability in Tibet and Xinjiang, by the growing potential of a 1.6 billion-strong South Asian market, and by its trade and maritime interests in the Indian Ocean.
Ever since it was admitted in SAARC as an observer in 2006, China has vastly improved its economic and political engagement with the SAARC countries. At the Kathmandu summit, Chinese Vice Foreign Minister Liu Zhenmin promised a Chinese investment of $30bn for infrastructure development in South Asia and 10,000 scholarships for young South Asians, as a mark of China commitment to the region.
India is prepared for an intensive economic engagement with China at the bilateral level but is not ready or willing to open its strategic space in the region for Chinese presence and influence.
It is not too happy to admit China as a SAARC member or even elevate its observer status in the regional organisation. India is resisting pressure from its SAARC neighbours on China under the argument that SAARC has still to achieve internal cohesion and consolidation.
India’s unexpressed fears are on two counts. As a full member, China will get a veto in SAARC affairs as SAARC decisions are taken unanimously. China may therefore block projects that may offer strategic and economic advantage to India. After all, China did restrain both the Asian Development Bank and lately even Japan, from supporting projects in India’s north-eastern state of Arunachal Pradesh. China is also opposing Indian oil exploration projects in what it considers disputed waters off Vietnam in the South China Sea.
India is also concerned that even as a dialogue partner, China could breach SAARC solidarity if it conflicts with its perceived economic and strategic interests, as it did with ASEAN in 2012. India seems to be gearing to integrate its neighbours even in the face of the Chinese challenge and the Pakistani resistance.
- SAARC Preferential Trading Arrangement (SAPTA) was signed in 1993 and entered into force in 1995.
- The Agreement reflected the desire of the Member States to promote and sustain mutual trade and economic cooperation within the SAARC region through the exchange of concessions.
- SAPTA had no significant impact on intra-regional trade of SAARC -It was firstly, one of the least ambitious trading agreements.
- The agreement provided for a positive list; the trade of the items on positive list could be regulated.There was a lack of commitments on tariff reduction; it was a completely voluntary arrangement.There was no clarity on rules of origin.There was no provision for a Dispute Settlement Mechanism.
- The South Asian Free Trade Area (SAFTA) is an agreement reached in 2004 to create SAARC free trade area. The members of SAARC signed a framework agreement on SAFTA to reduce customs duties of all traded goods to zero by the year 2016.
- The SAFTA agreement came into force on 1 January 2006 and is operational following the ratification of the agreement by the seven governments.
- Major instruments of SAFTA:- Trade Liberalisation Programme, Rules of Origin, Institutional Arrangements, Consultations and Dispute Settlement Procedures, Safeguard Measures, Special Provisions for Least Developing Countries of SAARC. Though an advance over SAPTA, SAFTA has not been able to improve the trade relations of SAARC members significantly -Intra-regional trade is still below 5% of the total trade of the SAARC members.The concept of ‘sensitive list’ exists in SAFTA; trade of the commodities on sensitive list can be regulated by the countries.
- The countries continue to maintain big sensitive lists. Though there is a commitment on reducing tariff barriers; non-tariff barriers still remain high. The trade between India-Pakistan, the two largest members of SAARC, is still languishing at less than 3 billion US $; studies suggest that an equal amount of trade happens through the Dubai route and illegal trade. Pakistan is yet to award India, the status of Most Favored Nation (MFN).
SAARC 18TH Summit, 2014 Outcomes =
- The 36-point concluding Kathmandu Declaration states that members will continue their efforts to intensify regional cooperation on connectivity, renew their commitment to a South Asian Economic Union, strengthen the Social Window of the SAARC Development Fund, and reiterate their commitment to free South Asia from poverty.
- Three important agreements related to connectivity—the Agreement for the Regulation of Passenger and Cargo Vehicular Traffic, the SAARC Regional Agreement on Railways, and the SAARC Framework Agreement for Energy Cooperation (Electricity), were expected to be signed. The first two agreements were stalled because Pakistan held back, saying it still had to complete its “internal processes” regarding these pacts. The third, on energy, was signed.
The Critical Analysis
- Over the last 25 years, despite extremely difficult political circumstances, SAARC has managed to create situations, institutions and forums where Heads of State have had to shake each other’s’ hands and go into talks together.
- SAARC has tackled important topics for the region such as a social charter, development agreements and even the sensitive subject of fighting terrorism.
- The food and development banks, Agreement on Transportation, Energy are important steps in the right direction.
Exchanges in the areas of civil society and science have become one of the pillars of South Asian integration efforts.
- In its 30 years of existence, SAARC failed to hold 11 annual summits for political reasons, both at the bilateral and internal levels. The last summit in Kathmandu was held after a gap of three years.
- The intra-regional trade of SAARC amounted to $40.5 billion in 2011, which constitutes just 5% of member countries’ trade. The number pales into insignificance when compared with the volume of trilateral trade between member-countries of NAFTA, the North American Free Trade Agreement, (the US, Canada and Mexico) which hit $1 trillion in 2011.
- While different regions of the world have progressed even to monetary union, SAARC has failed to even come up with a free trade agreement.
- Even in the Kathmandu Summit 2014, there were three connectivity agreements on road, rail and energy, to be endorsed by the eight SAARC leaders. Only one of these – on energy – has been signed.
Reasons for failure
- Weak Cultural Identities The South Asian Region comprises countries sharing common history, heritage and culture. The horrors of divisions and sub-divisions have however created fissures. These fissures are commonly articulated through the ideas of distinct cultures. Pakistan wants to assert itself as Islamic State and calls India a Hindu State. The debates regarding identity are similarly going on in Sri Lanka and Bangladesh. The pursuit of maintaining distinct cultural identity by every country has not allowed the region to come together.
- Conflict between India and Pakistan Rivalry between India and Pakistan, the two largest members of SAARC, has hovered hugely on SAARC. The rivalry continues to restrain SAARC from functioning as a sub-regional organization.
- Indian Foreign Policy Indian Foreign Policy actions – 1971 war, Indo-Sri Lanka Accord continue to haunt the neighboring countries. India has not forcefully articulated South Asian Vision; even the progressive ideas like the Gujral Doctrine have not been implemented on ground.
- Unresolved Border and Maritime Issues The region is still beset with many unresolved border and maritime issues. These unresolved borders have led to problems of Terrorism, Refugee Crisis, Smuggling, Narco-Trade. The unresolved issues continue to mar cooperative relations.
- Role of External Powers, especially ChinaIndia’s ambitions in the region crisscross with China’s ambitions to have an influence on the region. China has in past decade strengthened its relations with Bangladesh, Sri Lanka. This has led to a trust deficit in the grouping.
- SAARC Charter Article X(2) of the SAARC Charter mandates that decisions, at all levels in SAARC, are only of multilateral issues, and only those issues are for inclusion in the agenda in a SAARC summit meeting on the basis of unanimity. The SAARC platform thus cannot be used to resolve bilateral issues; this has undermined the scope and potential of SAARC.
- Asymmetry between Size of India and other SAARC countries
- As South Asians we should focus on developing our South Asian identity: believe in ourselves as a region. Rather than follow the herd mindset of criticizing SAARC for what it has not done, we must value its successes and appreciate the context in which they have been achieved. We need to remember that South Asia is a diverse group of countries and SAARC has to take everyone onboard. The Association has made significant gains.
- We need to recognize, support and build on them. The best assistance to SAARC would be to remove the gap between professions of collective intent and actual cooperative action.
- We need to prioritize regional objectives and streamline them with national priorities. In this context, the Functional Ministries need to be sensitized to the importance of regional cooperation in domain-specific areas.
- We need to develop policy approaches that take into account the political and economic complexities of SAARC, in particular the needs and developmental priorities of the less developed countries. The physical and soft connectivity among the SAARC countries needs to be developed and strengthened. Trade integration needs to be expedited through faster implementation of SAFTA.
- The success of SAARC institutional arrangements will rest on identification and pursuit of the core projects which could yield tangible results. These projects can be easily identified in the area of trade facilitation, removal of barriers, improvement of regional transport, removal of transit restrictions, opening up of port facilities and promotion of trade in energy in a comprehensive way, comprising regional grids for electricity, hydropower, and gas pipelines. Cross-border transactions must be depoliticized and pursued purely on economic terms.
Recent SAARC SUMMIT (2016)
In the wake of the Uri attack, Indian government has launched diplomatic offensive to isolate Pakistan internationally and in its neighbourhood.
- India has decided to pull out of the SAARC summit in Islamabad this November, with Afghanistan, Bhutan∙ and Bangladesh deciding to follow suit.
- The decision is unprecedented as this is the first time that India has cancelled participation in the regional group’s summit meeting because of actions that it blames on Pakistan-based elements.
- As per Experts, India’s cancellation might handicap economic integration in South Asia.
SAARC minus Pakistan
- By pulling out of the SAARC summit in Islamabad, the government is trying to achieve two ends: sending a tough message in the wake of the Uri attack, but also that it is going ahead with its plan for ‘SAARC minus Pakistan’ instead.
- Since the previous Nepal summit, Pakistan has blocked all protocols to better link the region, while India has pursued a “SAARC minus Pakistan” plan to push through with agreements it is keen on.
- Motor vehicle movement agreement, railway linkages, and the SAARC satellite programme for which all SAARC countries apart from Pakistan have signed up.
- With Afghanistan, which cannot be accessed by land, the two governments have discussed a separate “air corridor” for cargo.
- A bigger articulation of that vision is expected in mid-October, when India hosts the BIMSTEC outreach summit on the sidelines of the BRICS summit in Goa.
- Another grouping of India, Bangladesh, Bhutan, Maldives, Nepal, and Sri Lanka met for the South Asia Subregional Economic Cooperation (SASEC) programme in Delhi to release the first SASEC Operational Plan 2016-2025.
- SASEC’s lead financier, the Asian Development Bank (ADB), has already approved about 40 infrastructures and IT projects worth about $7.7 billion.
Pakistan’s line of action
Pakistan continues to receive support from several other countries outside of the SAARC, most notably∙ China, and also has a new relationship with Russia that conducted its first-ever military exercises in Pakistan just days after the Uri attack. Iran too sent four naval warships to the Karachi port to participate in a Passage exercise (PASSEX).
Way forward for India
An economic union is the order of the day. If India has to achieve its global desires to be an economic power, she has to get into the driver’s seat and create an environment which provides opportunities and not just veto them for security concerns.
- The 2016 BRICS summit was the eighth annual BRICS summit, an international relations conference attended by the heads of state or heads of government of the five member states Brazil, Russia, India, China and South Africa. The summit was held in Panaji, Goa in India, from 15th to 16th October 2016. India will hold the chair of the BRICS from February 2016 to December 2016.
Brazil, Russia, India, China and South Africa (BRICS) are leading emerging economies and political powers at the regional and international level.
In 2008. They had their first official meeting in 2009
The acronym, BRIC, was coined by Jim O’Neill of Goldman Sachs way back in 2001
He predicted that by year 2050, Brazil, Russia, India and China would become bigger than the 6 most industrialized nations in dollar terms and would completely change the power dynamics of the last 300 years
It was pointed out that high growth rates, economic potential and demographic development were going to put BRICS further in a lead position
Why is BRICS suddenly so important?
The idea of development bank (NDB) and Contingency Reserve Arrangement (CRA) has strengthen BRICS as a grouping Both of these concepts were formalised over in 2015 (@BRICS summit at Fortaleza and Brasilia) and this was seen as a strong signal to the challenge of western dominated discourses in some forums (IMF, WB)
What prompted the need for emergence of BRICS?
Most multilateral institutions were designed in the era when the West dominated the world. The US and Europe are over-represented in the IMF and the World Bank. Together with Japan, they control most regional development banks as well! That’s a big bad bully in making, right?
The main reason for co-operation to start among the BRICs nation was the financial crises of 2008
The crises raised scepticism on the dollar dominated monetary system and the need for participation by non-G7 countries became evident.
What reform did BRICS want out of the multilateral institutions?
Since their inception in 1944, the Bretton Woods institutions (IMF and World Bank) had not reformed their governance structure, to give more voting and voice to emerging economies. Both dominated by USA and developed countries. Both were out of sync with the new dynamics of world economy.
The BRICs called for the “the reform of multilateral institutions in order that they reflect the structural changes in the world economy and the increasingly central role that emerging markets now play.
BRICS managed to push for institutional reform which led to International Monetary Fund (IMF) quota reform in 2010 (although, it met with limited success as United States Congress did not ratify)!
Three new terms? Bretton Woods, Quota reforms, 2008 financial crisis. We will get to them later.
So, essentially, BRICS opened up a possibility for countries of the global South to challenge the global North. When the quota reforms were quashed in 2010, BRICS moved towards enlarging their spheres of cooperation. We will talk about the BRICS bank at a later stage.
Now that NAM (Non-alignment) is almost defunct and very little wealth is left in the Commonwealth, BRICS provide a great alternate for India to build its global profile.
But don’t we have a G 20 group to further India’s interest in the global arena? Yes, that’s another big one (besides UN).
G 20 is a bloc of developing nations established on 20 August 2003. The G-20 accounts for – 60% of the world’s population, 70% of its farmers and 26% of world’s agricultural exports.
India has tried to use BRICS as a forum to engage China as the latter has become the largest market for the fast-industrializing countries of East Asia. India wants to resolve the age-old mis trust and complicated relationship between the two countries since the 1962 war between them.
What are the factors that will bolster co-operation among BRICS members?
Firstly, the common need among developing countries to construct economic order that reflects current situation will drive the BRICS’ efforts. In this matter, the idea of NDB and CRA are defining and will have a huge geo-economic and geopolitical impact
Secondly, the BRICS alternative idea in the landscape of global governance will attract support from other countries. There have been suggestions by political analysts that BRICS may expand its member quota
Thirdly, the expansion of BRICS interaction to other sector will make it more strong partnership
Lastly, Chinese support to BRICS will make sure that group remains a force to reckon with in the future
Chinese support – interesting point. Some would say that a lot depends on how China carries its might behind BRICS for the time to come.
Some concerns regarding the future of BRICS
Competition within themselves – The BRICS countries aspire to be regional powers and hence at some point will compete with each other
Different forms of governance – They have different political systems with Brazil, India and South Africa being democracies while Russia and China having authoritarian characteristics. It would be interesting to see how policy consensus is brought about!
Trade conflicts, maybe? Brazil and Russia are commodity exporting countries and thus benefit from high commodity prices while India and China are commodity importers that benefit from low commodity prices
Territorial Issues – China and India have outstanding territorial issues to resolve and India looks askance to any institution that has Chinese domination. Russia looks suspiciously at China’s interest in its sparsely populated far eastern of Siberia
The big daddy China – China spearheads three other major initiatives in this region – One Belt One Road (OBOR), Asian Infrastructure Investment Bank (AIIB) and SCO. You should know that the 7th BRICS summit was held as a joint summit with SCO. BRICS has to find a reckoning space among them to keep china’s interests alive!
Slow-down in the Growth rate of most of BRICS countries
Parting words on BRICS
These are some of the fodder points that you can use in any answer involving BRICS and world arena.
Engaging China has been one of the important components of India’s foreign policy in recent years, considering that co-operation and negotiations with China is imperative to clearing the mistrust between the two countries.
Geostrategically, BRICS are now represented on all continents of the global south. In bilateral and regional agreements, the BRICS emphasize south-south solidarity and horizontal cooperation in contrast to western dominance.
Yet, in global fora such as G20, UN Security Council or World Climate Conferences, BRICS claim to speak on behalf of the developing world (whether they actually do represent these countries is disputable) and gradually challenge western supremacy in international politics.
Success of BRICS
BRICS summits have been able to establish number of institutions. Some of it are mentioned below.
(a) The New Development Bank (NDB)
The New Development Bank (NDB), formerly referred to as the BRICS Development Bank, is a multilateral development bank operated by the BRICS states. The bank’s primary focus of lending will be infrastructure projects with authorized lending of up to $34 billion annually. South Africa will be the African Headquarters of the Bank named the “New Development Bank Africa Regional Centre”. The bank will have starting capital of $50 billion, with capital increased to $100 billion over time. Brazil, Russia, India, China and South Africa will initially contribute $10 billion each to bring the total to $50 billion.
The BRICS Contingent Reserve Arrangement (CRA) is a framework for providing protection against global liquidity pressures. This includes currency issues where members’ national currencies are being adversely affected by global financial pressures. It is found that emerging economies that experienced rapid economic liberalization went through increased economic volatility, bringing uncertain macroeconomic environment.
The CRA is generally seen as a competitor to the International Monetary Fund (IMF) and along with the New Development Bank is viewed as an example of increasing South-South cooperation. It was established in 2015 by the BRICS countries Brazil, Russia, India, China and South Africa.
The legal basis is formed by the Treaty for the Establishment of a BRICS Contingent Reserve Arrangement, signed at Fortaleza, Brazil on 15 July 2014. With its inaugural meetings of the BRICS CRA Governing Council and Standing Committee, held on September 4, 2015, in Ankara, Turkey it entered into force upon ratification by all BRICS states, announced at the 7th BRICS summit in July 2015.
(C)BRICS payment system
At the 2015 BRICS summit in Russia, ministers from BRICS nations, initiated consultations for a payment system that would be an alternative to the SWIFT system. Russian Deputy Foreign Minister Sergey Ryabkov stated in an interview, “The finance ministers and executives of the BRICS central banks are negotiating … setting up payment systems and moving on to settlements in national currencies. SWIFT or not, in any case we’re talking about … a transnational multilateral payment system that would provide greater independence, would create a definite guarantee for BRICS.”
The Central Bank of Russia (CBR) also started consultations with BRICS nations for a payment system that would be an alternative to the SWIFT system. The main benefits highlighted were backup and redundancy in case there were disruptions to the SWIFT system. The Deputy Governor of the Central Bank of the Russia, Olga Skorobogatova stated in an interview, “The only topic that may be of interest to all of us within BRICS is to consider and talk over the possibility of setting up a system that would apply to the BRICS countries, used as a backup
EIGHTH BRICS SUMMIT
The Eighth BRICS Summit, held at Goa under the theme “Building Responsive, Inclusive and Collective Solutions.”
The summit concluded with adaptation of Goa∙ Declaration. The ninth BRICS Summit will be hosted by China in 2017.
Key Highlights of Goa declaration
On world Security– Strongly condemned terrorism in all its forms, committed to increase effectiveness of the UN counter terrorism framework. Also, called for need for adaptation of Comprehensive Convention on Terrorism (CCIT) in the UN General Assembly
On SDGs– Welcomed adoption of 2030 Agenda for Sustainable Development and its Sustainable Development Goals.
On UN Reforms– Reiterated urgent need to reforms of the United Nations, including International UN Security Council to increase representation of developing countries.
On New Development Bank- BRICS members were satisfied with the approval of the first batch of loans by the New Development Bank (NDB), particularly in renewable energy projects in BRICS countries.
BRICS Contingent Reserve Arrangement
- CRA, established in 2015 by BRICS member nations is now operational and the central banks of the∙ grouping’s members are “fully ready to carry out” the transactions.
- It is a framework for the provision of support through liquidity and precautionary instruments in response to actual or potential short-term balance of payments pressures.
BRICS RATING AGENCY
- BRICS have agreed to set up an independent rating agency based on market-oriented principles in order to∙ further strengthen the global governance architecture.
- BRICS institution-building is critical for transforming the global financial architecture to one based on the∙ principles of fairness and equity.
- The BRICS countries have already set up New Development Bank (NDB), which became operational last year, to meet funding requirements of the members.
- There are concerns that the methodologies of the big three global agencies- S∙&P Global Ratings, Fitch Ratings and Moody’s Investors Service- is biased against developing countries, reflected by their poor rating of these economies.
- Despite having deep capital buffers, the ratings of multilateral banks like the BRICS-promoted NDB are affected due to the parent countries’ sovereign ratings.
The BCIM Forum for Regional Economic Cooperation, earlier known as the ‘Kunming Initiative’, was founded in 1999 with the objective of promoting trade and economic development in the sub-region stretching from south west China to eastern India (‘Kunming to Kolkata’) via Myanmar, India’s north east region (NER), and Bangladesh.
It was considered as a provincial initiative and did not have much resonance among at least the policy makers and the MEA officials. Some of the earlier meetings that were attended, for instance, by India’s Secretary (East), Mr. Rajiv Sikri in 2006 questioned its utility when several other similar initiatives existed in the region.
On the other hand, later in 2011, a Kolkata-Kunming car Rally that was expected to encourage the concept of BCIM found official mention in the Joint Statement between China and India.
However, it was only in 2013 year that the BCIM grouping gained some traction when it was first mentioned in the Joint India-China communiqué during PM Li’s visit to India in May 2013 and it was again discussed between the two during PM Manmohan Singh’s visit to Beijing in October 2013. Thus, it became a Track I initiative with the prospects of the objectives of BCIM being realized.
As a follow up of Heads of State meetings, a Joint Study Group (JSG) of BCIM to chart out the modalities for achieving the goals of BCIM economic corridor was set up and it held its first meeting at Kunming in December, 2013. JSG has outlined a number of steps to be taken to convert the concept into a reality. Cooperative areas between the four members would include:-
(a) Physical Connectivity
(b) Trade in goods, services and investment including finance
(c) Environmentally sustainable development
(d) People to people contacts
China and India are adding fresh momentum to the establishment of the Bangladesh-China-India-Myanmar (BCIM) economic corridor, which is expected to develop gradually before more ambitious goals are achieved.
From the West Bengal capital, the corridor will head towards Benapole, a border crossing town in Bangladesh. After passing through Dhaka and Sylhet, it will re-enter the Indian territory near Silchar in Assam. The rest of the passage will be connected with Imphal and then pass through the India-built Tamu-Kalewa friendship road in Myanmar. Mandalay will be the next focal point of the corridor before the road enters Yunnan, after crossing Lashio and Muse in Myanmar. The Chinese stretch extends from Ruili before reaching Kunming through Longling and Dali.
The central corridor can be connected with two supplementary passages to the north and the south. Starting from Kunming, the northern passage heads towards Myitkyina, capital of Kachin state in Myanmar, before extending to Ledo in Assam. After crossing Dibrugarh and Guwahati, this road enters northern Bangladesh and joins the central corridor inside the country, before reaching Kolkata.
Problem and Prospects
Even though India has agreed in principle for a BCIM Economic Corridor, it also has some apprehensions.
Firstly, there are still several insurgent and rebel groups in North East India which are involved in a host of anti national activities like gun running, drug trafficking; they are also being used by foreign intelligence agencies (e.g. Anthony Shimray incident where Chinese intelligence agencies were alleged to have been involved in fuelling insurgency by sending a huge consignment of Chinese arms to NSCN(IM) in the NE; there have also been reports of some Chinese intelligence agents being active there; ISI has also been involved in sending arms).
Secondly, Sino-Indian border problems are well known and therefore Indian sensitivities concerning the claims and possible insecurities on that account. Tirap district of Arunachal Pradesh is inhabited by Nagas and there is an insurgent activity there. Even though some funds for constructing Ledo/Stilwell Road have been earmarked, India is not in favour of reviving the old Burma/Stillwell Road linking India’s NE to Yunnan through Myanmar because of security reasons. This is despite the fact that enormous commercial benefits (especially with reduction of transportation costs) might accrue. There are apprehensions that this might give China advantage in case of a military conflict.
Thirdly, while there is a dire need to develop the North eastern states of India and China can provide the wherewithal for infrastructure development including the much needed funds, the Indian government remains reticent in involving China in ways that might be detrimental to Indian interests.
Further, during the visit of Japanese PM Shinzo Abe in January 2014, Japan has been invited to take part in the infrastructure development of NE States.
Fourthly, there is a growing trade imbalance between India and China and any free flow of trade and commerce through the envisioned economic corridor would only increase the trade imbalance against India as China has not been able to practically address India’s grievances on this issue in any meaningful way despite remonstrations by India to this effect during summits and other bilateral exchanges.
Additionally, India has several bilateral and multilateral initiatives with the regional countries to address precisely the same issues. For instance, India has Bay of Bengal Initiative for Multi Sectoral Technical and Economic Cooperation (BIMSTEC), Mekong Ganga Cooperation initiative and Trilateral between India, Myanmar and Thailand for improving connectivity; all such initiatives involve either cooperation with Bangladesh or Myanmar or both that have similar objectives to that of BICM.
There is an overlap in goals and objectives of a number of regional and sub regional groupings that remain an important sub set of India’s ‘Look East Policy’ set in motion in the mid 1990s. That is why India had not been very keen to add another sub-regional grouping to its kitty where, possibly, the central role of India in some of these platforms could be undermined. There have also been talks of merging or combining of BCIM and BIMSTEC but regional geo-political environment does not appear to be conducive for acceptance of such proposals.
Mekong Ganga Cooperation (MGC)
Origins: An initiative by 6 countries – India and 5 ASEAN countries, namely, Cambodia, Lao PDR, Myanmar, Thailand and Vietnam
Relevance and Evolution
Both the Ganga and the Mekong are civilizational rivers, and the MGC initiative aims to facilitate closer contacts among the people inhabiting these two major river basins. Key areas of cooperation under MGC were tourism, culture, education, and transport & communications.
Despite ASEAN’s rhetoric and posturing, it remains a weak organisation incapable of handling serious challenges, economic or strategic. There has been a proliferation of trade groups carrying many (confusing!) acronyms.
With India’s elevated status in ASEAN by 2012
the time is ripe to enter the Mekong Region. Apart from reinforcing India’s security, it will remove economic isolation of the North East Region (NER).
There is a lack of connectivity between India, Myanmar and beyond and hence a need to build connecting corridors. Unlike the European Union, with nascent Asian economies we have to follow the “hub and spoke” process which impedes in the trade process.
India hosted the 6th MGC Ministerial Meeting on September 4, 2012. New Areas of Cooperation added in the 6th MGC –
- Conservation of Rice GermPlasm – A new area of mutually beneficial cooperation in rice production techniques and downstream processing projects
- Enhancing cooperation among SME – India circulated a concept paper
- Health – Aim is to strengthen the region’s capacity to respond to the menace of drug resistant malaria and other such emerging public health threats
- Common Archival Resource Centre (CARC) at Nalanda University
#2. Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC)
When? 1997 | HQ: Dhaka, Bangladesh
Origins: BIMSTEC started off as the Bangladesh, India, Sri Lanka, Thailand Economic Cooperation Group in 1997. Myanmar joined in 1997, while Nepal and Bhutan joined in 2004 when the first summit was held in Bangkok.
Relevance and Evolution
- BIMSTEC is said to have been encouraged by India’s Look East Policy (LEP) and Thailand’s Look West Policy.
- Earlier also, Bay of Bengal had emerged as a vehicle for regional cooperation as BBIN grouping – Bangladesh, Bhutan, Nepal and India after Pakistan’s reluctance to sign on to the South Asian connectivity agreements at the SAARC summit, 2014.
- Now, with the collapse of the SAARC summit in Islamabad, 2016 the Bay of Bengal has turned into a zone of regional cooperation.
- Further, with rich history of maritime commerce across the Bay of Bengal and being high-end tourist∙ destination there exist enormous possibilities for regional economic cooperation among the members of the BIMSTEC and SAARC (minus Pakistan).
- BIMSTEC was seen as a vital bridge between SAARC and ASEAN. Myanmar and Thailand are already in ASEAN while Japan is Thailand’s second-biggest export destination.
But in the present context, when the members of BIMSTEC have acquired memberships in various other regional/sub-regional organisations which also promote cooperation at different levels, it might not end up being that fruitful an organisation (that it was intended up to be).
BIMSTEC identified 14 priority areas where a member country takes lead. India is lead country for –
- Transport & Communication
- Environment & Disaster Management
- Counter Terrorism & Transnational Crime
Pakistan and China do not form member countries and this grouping provides India an opportunity to increase its sphere of influence.
India should be more proactive towards BIMSTEC to make its LEP 3.0 a success. BIMSTEC could help India to further increase its cooperation with countries located around the Bay of Bengal along with two of its adjuncts, namely Malacca Straits and Andaman Sea.
Transport & Communication being one of the priority focus areas – Better integration with North East region & East Asian economies is a theme to look forward to.
What has India done for BIMSTEC?
India and Thailand are the two main (rich) partners of BIMSTEC. With Thailand mostly embroiled in controversies, India is looked upon to take a lead and act as a catalyst. Remember the lead areas with India? Transport, Tourism, Environment & Terrorism.
The last meeting (3rd Summit) @Nay Pyi Taw (New Capital of Myanmar) did not see any major outcomes, but a few of worth of mentioning here are –
- 2015 was declared as the Year of BIMSTEC Tourism
- The framework agreement on the BIMSTEC FTA was signed in 2004, but it is not yet fully operational.
- Ratify conventions related to other areas of responsibilities
TIP: Whenever you think about the advantage of our associations with our north eastern neighbouring countries, think of two things –
- Transportation woes
- Fighting crime syndicates (terrorism, smuggling, narcotics and what not)
Consequently, our associations with them will look to establish new roads, routes and pacts to counter them. Of course, there is a lot in common with culture and agricultural produce etc etc. but you get the bigger picture right?
One such project is Kaladan Multi-modal Transit Transport Project in Myanmar. It was supposed to be completed by 2015, but sigh.
Source: Indian Express
Time to Energize BIMSTEC
How long can SAARC (30+ year old organisation) wait for India and Pakistan to sort out their bilateral issues and push forward for the broader agenda of regional economic cooperation?
Given the current state of India-Pakistan relations, it is unlikely that Pakistan will agree to even a minimal set of economic cooperation arrangements within the SAARC framework, as was evident in Kathmandu when it refused to sign the multi-modal road and rail transport agreement. (Source – The Diplomat).
The most important driver is going to be the BIMSTEC Free Trade Area. While a Framework Agreement has been signed, it has yet to come into force.
Point being that India needs to reallocate its priority with the new surge @ Act East and get the best out of these regional groupings where it can play a natural leader.
BIMSTECH 2016 summit
The Summit was held in Goa in October 2016. The next meeting will be held in Nepal for the Fourth BIMSTEC Summit in 2017.
Focus Areas of Summit were Regional∙ connectivity, terrorism, development of the region, Cooperation in various sectors, promoting people-to-people contacts and tourism.
In this regard, BIMSTEC countries have issued∙ Leaders Retreat Outcome Document.
Key Highlights of document
For countering terror
Strongly condemned the recent terror attacks in the region and called for strong measures for the states⎫ that encourage, support and provide sanctuary to terrorists.
Called for early ratification of the BIMSTEC Convention on Cooperation in combating International⎫ terrorism, criminal matters, transnational organized crime and drug trafficking.
Cooperation for Environment– Agreement on greater efforts towards the conservation of the mountain ecosystems,∙ bio-diversity and agreed for implementation of the Paris Agreement on Climate Change.
Enhancing people to people contact– Proposed for establishment of BIMSTEC Buddhist Circuit and BIMSTEC Heritage Sites, decided to expedite the establishment of the BIMSTEC Cultural Industries Commission and BIMSTEC Cultural Industries Observatory in Bhutan.
Fisheries and Food Security– Cooperation in sustainable development of fisheries in Bay of Bengal region.
Eliminating Poverty- Reaffirmation to the commitment to effective implementation of the BIMSTEC Poverty Plan of Action.
For Trade– Commitment to the early conclusion of BIMSTEC Free Trade Area negotiations was renewed∙ along with directing the Trade Negotiating Committee (TNC) and Working Groups to expedite the finalization of its constituent agreements.
Exploring other areas of development-Agreement to explore ways to deepen cooperation in areas such as aquacultures, hydrography, seabed mineral exploration, coastal shipping, eco-tourism and renewable ocean energy with the objective of promoting holistic and sustainable development of the region.
Mega regional trade deals are in vogue in an otherwise fragile global economy. In an environment of falling aggregate demand, these trade deals are seen as a means to insulate economies from market uncertainties. Three important mega regional’s are currently under negotiation: the Regional Comprehensive Economic Partnership of Asia and the Pacific (RCEP), the Trans-Pacific Partnership (TPP), and the Trans-Atlantic Trade and Investment Partnership (TTIP).
It is expected that these agreements, once concluded and implemented, will set the stage for a new generation of global trade and investment rules.In this article we will explain What is RCEP ,what will be its significance for India and what are the point of contention among countries in RCEP.
What is RCEP?
- Regional Comprehensive Economic Partnership (RCEP) is a proposed free trade agreement (FTA) between the ten member states of the Association of Southeast Asian Nations (ASEAN) (Brunei, Burma (Myanmar), Cambodia, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand, Vietnam) and the six states with which include India,China,Australia,Japan,South Korea and Newzealand.
- In total, the grouping of 16 nations includes more than 3 billion people, has a combined GDP of about $17 trillion, and accounts for about 40 percent of world trade.
- If negotiated successfully, RCEP would create the world’s largest trading bloc and have major implications for Asian countries and the world economy.
Key features of the RCEP
The RCEP seeks to achieve a modern and comprehensive trade agreement among members. The core of the negotiating agenda would cover trade in goods and services, investment, economic and technical cooperation and dispute settlement.
The partnership would be a powerful vehicle to support the spread of global production networks and reduce the inefficiencies of multiple Asian trade agreements that exist presently.
At the launch of negotiations in 2012, the leaders of each relevant country endorsed the “Guiding Principles and Objectives for Negotiating the Regional Comprehensive Economic Partnership.” The key points of this document are as follows.
Scope of negotiations
- RCEP will cover trade in goods, trade in services, investment, economic and technical co-operation, intellectual property, competition, dispute settlement and other issues. The agreement will encompass trade in goods and services, economic and technical issues, intellectual property and investments, and dispute settlement mechanisms.
- As expected, ASEAN will be in the “driver’s seat” of this multilateral trade arrangement (though the idea was initially given by Japan), and has been repeatedly endorsed by India. The joint statement issued at the end of the first round of negotiations also reiterated “ASEAN Centrality” in the emerging regional economic architecture.
- The RCEP will have broader and deeper engagement with significant improvements over the existing ASEAN+1 FTAs, while recognizing the individual and diverse circumstances of the participating countries.
Negotiations for trade in goods
- Negotiations should aim to achieve the high level of tariff liberalization, through building upon the existing liberalization levels between participating countries.
Negotiations for trade in services
- The RCEP will be comprehensive, of high-quality and consistent with WTO rules and all service sectors will be subject to negotiations.
Negotiations for investment
- Negotiations will cover the four pillars of promotion, protection, facilitation and liberalization.
- Participants will be ASEAN members and FTA Partners. After the completion of the negotiations, countries other than the 16 states may join.
Comparison of RCEP with other regional Agreements
Significance of RCEP for India
- From India’s point of view, the RCEP presents a decisive platform which could influence its strategic and economic status in the Asia-Pacific region and bring to fruition its act east policy.
- It would be the world’s largest trading bloc covering a broad spectrum of issues such as trade in goods, services, investment, competition, intellectual property rights, and other areas of economic and technical cooperation. Together, the RCEP group of countries accounts for a third of the world’s gross domestic product, and 27.4 per cent and 23.0 per cent of the world’s goods and services trade, respectively.
- The RCEP agreement would complement India’s existing free trade agreements with the Association of South East Asian Nations and some of its member countries, as it would deals with Japan and South Korea.
- India is not a party to two important regional economic blocs: The Asia-Pacific Economic Cooperation and the Trans-Pacific Partnership New Delhi fears the TPP, although years away from reality, could mean losing some textile and drugs exports to countries like Vietnam, which has embraced both the TPP and the RCEP.
- TPP is set to change the landscape of global trade. For India, it is most likely to affect sectors like leather goods, plastics, chemicals, textiles and clothing. The RCEP would enable India to strengthen its trade ties with Australia, China, Japan and South Korea, and should reduce the potential negative impacts of TPP and TTIP on the Indian economy.
- RCEP will facilitate India’s integration into sophisticated “regional production networks” that make Asia the world’s factory. The RCEP is expected to harmonize trade-related rules, investment and competition regimes of India with those of other countries of the group.
- Through domestic policy reforms on these areas, this harmonization of rules and regulations would help Indian companies plug into regional and global value chains and would unlock the true potential of the Indian economy. There would be a boost to inward and outward foreign direct investment, particularly export-oriented FDI.
- India enjoys a comparative advantage in areas such as information and communication technology, IT-enabled services, professional services, healthcare, and education services. In addition to facilitating foreign direct investment, the RCEP will create opportunities for Indian companies to access new markets.
- This is because the structure of manufacturing in many of these countries is becoming more and more sophisticated, resulting in a “servicification” of manufacturing. India is well placed to contribute to other countries in RCEP through its expertise in services, not only consolidating the position of the region as the world’s factory but also developing it as the world’s hub for services.
Challenges in Final negotiation of RCEP
Finalizing the RCEP will not be a cakewalk for India and other countries involved in the negotiations as there are a range of issues that could act as spoilers.
- Huge economic disparities among the negotiating countries are likely to pose a challenge
- An inevitable source of trust deficit between China and the rest which has the potential to constrain regional economic cooperation is China’s aggressive postures on territorial disputes with Japan and India and with ASEAN member countries on the South China Sea disputes. This can pose as a hurdle in final negotiation of RCEP
- The existing five ASEAN+1 and twenty three ratified bilateral FTAs, varying greatly in their terms, pose a significant hurdle to RCEP negotiations.
- The lack of commonality across FTAs and varying internal policies of countries would prove to be a difficult task to harmonize and consolidate under RCEP.
Challenges and concerns for India from Joining RCEP
For New Delhi, following challenges lie ahead.
- First, tariff barriers, which have been a matter of discontent in bilateral FTAs, particularly in the case of the ASEAN-India FTA, will be central to the negotiations in the upcoming rounds of RCEP negotiations.
- Non-trade issues such as environment and labor are likely to be prickly as well and need greater attention. While many Countries in RCEP want a stricter norms and standards on environment and labor issues while India’s interest lie in liberal environment and labor norms as this makes Indian industry competitive. India therefore should bat for liberal environment and labor norms while negotiating in RCEP.
- India must take steps to strengthen its Medium, Small and Micro Enterprises (MSME) sector, equipping it not only to survive the free flow of trade, but also to become a set of more competitive players. Higher investments in R&D and achieving international standards in terms of delivery are needed.
- An internal commerce ministry estimate that signing the 16-country Regional Comprehensive Economic Partnership (RCEP) trade agreement will result in a revenue loss of as much as 1.6% of gross domestic product
- Finally a major difficulty for India will be negotiating terms with China. India has to be firm and calculative in terms of taking tough policy decisions, while working tirelessly on capacity building of its domestic industries.
East Asia Summit (EAS)
East Asia Summit is a unique Leaders-led forum of 18 countries of the Asia-Pacific region formed to further the objectives of regional peace, security and prosperity.
Why is EAS important?
10 East Asia Summits have been held so far. India has been a part of this process since its inception in 2005. Think of it this way –
- EAS has held its annual meetings without fail since its inception
- As members – it has 10 ASEAN nations + 8 strategic partners including US, China, India, Japan
- This is what our PM said in the 9th EAS – “No other forum brings together such a large collective weight of global population, youth, economy and military strength. Nor is any other forum is so critical for peace, stability and prosperity in Asia-Pacific and the world.”
6 priority areas of regional cooperation within the framework of the EAS
- Environment and Energy,
- Global Health Issues and Pandemic Diseases,
- Natural Disaster Management, and
- ASEAN Connectivity
India’s involvement in regional collaboration in these 6 priority areas
At the 4th East Asia Summit (EAS), held in Thailand on 24-25 October 2009, the EAS Leaders endorsed the proposal for the revival of Nalanda University.
- Nalanda was a renowned Buddhist centre of learning, in Ancient India. It taught students in medicine, mathematics, astronomy and politics
- The University envisages seven schools located at its campus in Rajgir
- Ministry of External Affairs has offered 6 scholarships to students from Cambodia, Myanmar, Lao PDR and Vietnam to pursue higher studies at Nalanda University
- In news – Amartya Sen quits Nalanda University
#2. Global Health Issues and Pandemic Diseases
- Australia and India are co-chairs of the Task Force for Access to Quality Medicines and other Technologies Task Force (AQMTF)
- India has also hosted a Round table on Trauma Care and Nursing on 15-16 October 2015, in New Delhi
#3. Natural Disaster Management
- 2012: India hosted an ‘EAS-India Workshop 2012: Building Regional Framework for Earthquake Risk Management’ in New Delhi
- 2014: India also hosted the first Meeting of the 24×7 Points of Contact among the National Disaster Response Agencies of East Asia Summit (EAS) countries
- Launch of Virtual Knowledge Portal (VKP). What is this?
The Virtual Knowledge Portal (VKP), a web based tool to share knowledge and best practices related to natural disaster risk assessment, mitigation and response among EAS countries. It is hosted by Natural Institute of Disaster Management, New Delhi.
#4. Launch of Regional Comprehensive Economic Partnership (RCEP)
At the 7th EAS in November 2012, the Leaders of 16 EAS participating countries launched the Regional Comprehensive Economic Partnership (RCEP)
What is RCEP?
Regional Comprehensive Economic Partnership (RCEP) is a proposed free trade agreement (FTA) between the 10 member states of the ASEAN and the six states with which ASEAN has existing FTAs (Australia, China, India, Japan, South Korea and New Zealand).
Gulf Cooperation Council (GCC)
The Gulf Cooperation Council (GCC) is a regional political organisation comprising the energy rich Gulf monarchies – Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates.
When and why was it founded?
- Establishment in Abu Dhabi in 1981 | HQ in Riyadh
- The founding charter focused more on issues of social and cultural cohesion, environmental and scientific coordination and economic cooperation
- Recently, Morocco and Jordan have applied for the GCC membership which is currently being studied by the GCC Expert Committee
India and GCC: Contours of cooperation
- The Gulf constitutes the “immediate” neighborhood of India separated only by the Arabian Sea
- The Gulf, as the principal source of India’s energy requirements, is central to our energy security interests: it meets 75% of our oil needs at present; as our demand increases in coming years, India’s dependence will go up to 90% by 2035.
- GCC is India’s largest trading partner as an economic grouping, with two-way trade being more than our ties with the European Union, ASEAN and North America
- Four GCC countries figure in India’s top 10 trade partners.
- We also have an eight-million strong community in the GCC that remits annually $35 billion to the national exchequer
- The India-GCC Free Trade Agreement which is in under negotiation could usher in a new era of trade
Although India and the GCC countries share a strong economic relationship, there is much progress to be achieved on the political front. Let’s have a close look at some of the important dimensions –
#1. Defence Diplomacy
India’s defence diplomacy with countries of the GCC is well reputed.
- India has signed a military protocol with Oman which has facilitated joint military exercises
- India has also signed a defence cooperation agreement with the UAE
- Our new naval diplomacy document increases our focus on west asian countries.
#2. Counter Terrorism
The meteoric rise of the Islamic State of Iraq and the Levant (ISIS) in neighbouring countries like Iraq and Syria pose a huge threat to the peace and stability of the GCC countries.
#3. Maritime Security
Primary maritime security threats include piracy at sea, smuggling of narcotics and arms and the imminent threat of maritime terrorism.
- These threats pose major challenges to the Sea Lines of Communication (SLOCs) that India depends heavily on to carry out trade by sea
- India’s international trade by sea amounts to about 90% of the foreign trade, and it takes place through 13 major ports and several minor ports
- In recent times the term “Indo Pacific era” has gained currency.
#4. Culture & Diaspora
- We have an eight-million strong community in the GCC that remits annually $35 billion to the national exchequer
- Minor concerns – If you remember, in 2013 Saudi Arabia issues a Nitaqat Law – The ‘Nitaqat’ law makes it mandatory for local companies to hire one Saudi national for every 10 migrant workers
- There had been widespread perception that the new policy will lead to denial of job opportunities for a large number of Indians working there.
- India had back then proactively conveyed concerns to the Saudi government
The Trans-Pacific Partnership pact reached recently between the United States and 11 Pacific Rim nations including Canada and Japan, has raised both hopes and concerns.
What is Trans-Pacific Partnership pact?
It is a trade pact that is intended to cut trade barriers and establish common standards for 12 countries.
What it does?
- It would set new terms for trade and business investment among the United States and 11 other Pacific Rim nations.
- It would phase out thousands of import tariffs as well as other barriers to international trade.
- It also would establish uniform rules on corporations’ intellectual property, open the Internet even in communist Vietnam and crack down on wildlife trafficking and environmental abuses.
- This is the largest trade pact in 20 years.
- The agreement covers 40% of the world’s economy.
- It is seen as a means to address a number of festering issues that have become stumbling blocks as global trade has soared, including e-commerce, financial services and cross-border Internet communications.
What its supporters say?
- The pact would boost growth in the U.S. as well as the Asian economies.
- It would be a boon for all the nations involved.
- It would unlock opportunities and address vital 21st-century issues within the global economy.
What its opponents say?
- Critics in the US say it would only help American companies send jobs abroad. Some people call it a “trade disaster”.
- Critics in other countries say it would benefit large corporations, particularly American big pharma, with the common people at the receiving end.
- Some people say it would reduce access to generic medicines in developing countries.
- Internet freedom campaigners see it as a big threat.
Why is the US interested in this deal?
- It is seen as a way to bind Pacific trading partners closer to the United States while raising a challenge to Asia’s rising power, China.
- Traditionally, the U.S. has tried to isolate its enemies and integrate allies with its own worldview. With china it couldn’t do either.
- China is now the world’s second largest economy, which has invested trillions of dollars in U.S. treasury bonds. Hence, isolating such an economy is next to impossible.
- Now, with China emerging as an economic powerhouse with new institutions such as the Asian Infrastructure Investment Bank in place, the U.S. is trying to form a grand alliance that would shore up its influence in Asia.Economists such as Joseph Stiglitz have pointed out that the TPP would hardly meet either its declared commercial goals or its undeclared strategic ambitions, and could turn counterproductive.
TPP and its implications for India
- India could experience huge export gains of more than US$500 billion per year—a 60 per cent increase–from joining an expanded TPP or participating in a comprehensive Free Trade Area of the Asia Pacific (FTAAP).
- It would increase both India’s exports and imports. It is also likely to boost India’s services exports through less trade barriers.
- possibility of trade diversion and raised concerns about erosion of India’s share in exports to the US and Europe.
- loss of competitiveness of Indian exports in European markets
- lower India’s export share to the US and the EU,
- Some of the export sectors such as textiles and clothing industry are likely to face stiff competition from Vietnam, and it may lead to trade diversion.
- concern of investment diversion, particularly as countries like Vietnam would offer more robust investor protection
India has to give due consideration to the costs if it is desirous of joining the TPP, as it will be required to comply with provisions relating to tariffs, SoEs, agriculture and IPR protection.
Some of the major concerns are as follows:
- Openness of market: India needs to work significantly in terms of openness of market as its tariff rates are significantly higher than those in the TPP countries
- Import competition: Domestic industries will face severe import competition due to tariff elimination on some of the products.
- SoEs: Membership of the TPP would prevent the government from using SoEs and government procurement as vehicles for achieving social and economic objectives, including employment generation.
- IPRs: The prices of pharmaceutical products can be expected to rise due to implementation of IPR agreements which will give more protection to patented medicine and may lead substantially to elimination of generic drugs from the market
- Government procurement: Apart from stressing non-discriminatory, fair and transparent procurement procedures, the TPP specifies timely publication of complete information on the procuring entity, the specific procurement, the time frame for submission of bids, and a description of conditions for participation of suppliers.
- As the agreement curtails the flexibility available to signatory countries to impose export restrictions on food, it will jeopardize India’s endeavour to ensure food security
- Labour standards: TPP bind the members to adopt and maintain laws and practices governing acceptable conditions of work relating to minimum wages, hours of work, and occupational health and safety. These labour standards may increase the labour cost.
- Environment standard in TPP agreement: The TPP agreement goes beyond the provisions in other FTAs to include wildlife trafficking, illegal logging and illegal fishing practices.
- The TPP members acknowledge that inadequate fisheries management, fisheries subsidies that contribute to overfishing and overcapacity, and illegal, unreported and unregulated (IUU) fishing can have significant negative impacts on trade, development and the environment and ‘thus recognize the need for individual and collective action to address the problems of overfishing and unsustainable utilization of fisheries resources’.
- This is in contradiction to India’s current policy of subsidizing the fishery industry. It may severely affect special governmental assistance programmes for around 15 million poor fishermen in India. Hence these TPP rules are likely to affect the multilateral process and impact India.