From UPSC perspective, the following things are important :
Prelims level : TRIPS
Mains level : Paper 3- Issues with free trade
Issues with free trade are making themselves more evident in the aftermath of the Covid pandemic. The article analyses the growing influence of the capital and how it is benefiting the few.
Issues with free trade
- Debates about free trade revolves around value of economic growth vs. the values of justice.
- The Economist (October 5) says “Investor-state dispute-settlement (ISDS) clauses of international trade and investment agreements give foreign investors the right to resort to a secretive tribunal to seek compensation when they are in disagreement with a host government.
- They threaten governments who want to pass laws that seem self-evidently in their country’s and even the world’s interests.
- The interests of remote financial investors are considered superior to the rights of local people represented by their own democratically elected governments.
- TRIPS (the Agreement on Trade-Related Aspects of International Property Rights) is another egregious example.
- Lobbies of multinational pharma companies want to protect their investors with intellectual monopolies under TRIPS, denying affordable medicines to the world’s poorer people.
- New business models are throwing more workers into short-term contractual arrangements to make it easier for investors to do business.
How it is relevant in India
- The Environmental Impact Assessment (EIA) notification 2020 make it easier for investors to take over lands for projects by debilitating the assessment process which requires that communities be heard.
- The new labour codes passed by Parliament to simplify regulations have also weakened the rights of workers to be represented by unions.
- In India, terms of trade have been stacked against small farmers to keep prices low for consumers.
- Terms are also against small enterprises in financial markets, and also when they supply to large buyers in global supply chains.
- The terms of trade are unfair for all workers who are on the supply side of labour markets vis-à-vis those who pay them.
- Small people do not have clout in any market. Those with more money set the terms of trade.
- Capitalism runs on the principle of property rights: Those who own more must have a greater say in the governance of the enterprise.
- Money is speaking too much in fixing the rules of the game: It influences elections; it controls the media; it powers lobbies for reforms at international and national levels.
The way the rules of the economy and trade are made must change to create a more just and resilient world. Voices of the poorest people and their associations must be heard more loudly than the opinions of the rich and their lobbies.