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Subject: International Relations

  • Nuclear Diplomacy and Disarmament

    Here’s what we are going the explain in this writeup:

    • The Backstory
    • What is the Missile Technology Control Regime (MTCR)?
    • What does India need to do to get in?
    • Does joining the MTCR make getting missile technology easier?
    • Does the MTCR actually stop the spread of missile technology?
    • Are there any sanctions for breaking MTCR rules?
    • Does the MTCR actually stop the spread of missile technology?
    • Why does India want to be in the Nuclear Suppliers Group (NSG)?
    • Why does the US want India in the NSG?
    • Why doesn’t Pakistan want India in?
    • And what is China’s problem?
    • Why then did China go along with the NSG waiver in 2008?
    • Why does India want to join Proliferation control regimes?
    • Why is India’s Bid for NSG being criticized?

    source

    The Backstory

    • Since 2008, India has been pushing forward to become an NSG member, where decisions are consensus based and not based on majority votes
    • It has also been looking for membership of other groups such as MTCR
    • India recently became the Member of MTCR, however its bid for getting membership of NSG was not successful because of opposition from China and 12 other NSG members

    #1. All about MTCR

    What is the Missile Technology Control Regime (MTCR)?

    Established in April 1987, it is a voluntary association of 35 countries and 4 “unilateral adherents” that follow its rules: Israel, Romania, Slovakia, Macedonia.

    The group aims to slow the spread of missiles and other unmanned delivery technology that could be used for chemical, biological and nuclear attacks.

    The regime urges members, which include most of the world’s major missile manufacturers, to restrict exports of missiles and related technologies capable of carrying a 500 kg payload at least 300 km, or delivering any type of weapon of mass destruction.

    How does one become a member of MTCR?

    • Prospective members must win consensus approval from existing members. United States policy had been that members that are not recognised nuclear-weapon states — including India — must eliminate or forgo ballistic missiles able to deliver a 500 kg payload at least 300 km
    • The US, however, made an exception in 1998 for Ukraine, permitting it to retain Scud missiles and, in October 2012, South Korea was allowed to keep ballistic missiles with an 800-km range and 500-kg payload that could target all of North Korea
    • For India, the US have waived these terms, allowing it retain its missile arsenal

    Does joining the MTCR make getting missile technology easier?

    • There are no special concessions for MTCR members. But India hopes its MTCR membership will be one more reason for the US to consider exporting Category 1 UAVs, Reaper and Global Hawk, which have been key to counter-terrorism efforts in Afghanistan, Pakistan, Somalia and Yemen
    • These drones have so far been sold to only one country, the UK, though unarmed versions have also been made available to Italy and South Korea
    • The US has been rethinking rules on exports, aware that competitors in Israel, Russia and China are working on similar products — and India wants to be at the head of the queue when the Reaper and the Global Hawk go on the market

    Are there any sanctions for breaking MTCR rules?

    • Rule breakers can’t be punished.
    • However, US law mandates sanctions for companies and governments that export MTCR-controlled items. The sanctioned entity can’t sign contracts, buy arms and receive aid for two years or more.

    Does the MTCR actually stop the spread of missile technology?

    • Yes and no. North Korea, Iran and Pakistan acquired ballistic missile technology from China. But then, China began to feel the pinch of US technology sanctions — and announced, in November 2000, that it would stop exporting ballistic missile technology.
    • Four years later, it applied for MTCR membership — but has been denied entry because of suspicion that some companies in the country are secretly supplying technology to North Korea.
    • Many others dropped missile programmes because of MTCR pressure: Argentina abandoned its Condor II ballistic missile programme (on which it was working with Egypt and Iraq) to join the regime. Brazil, South Africa, South Korea and Taiwan shelved or eliminated missile or space launch vehicle programmes. Poland and the Czech Republic destroyed their ballistic missiles.

    It is possible China may now seek some kind of bargain, whereby it is given entry to the MTCR in return for letting India get into the NSG, where it wields a veto.

    What after MTCR?

    • Admission to the MTCR would open the way for India to buy high-end missile technology
    • It will also make India’s aspiration to buy state-of-the-art surveillance drones such as the U.S. Predator, made by General Atomics.

    #2. All about NSG

    Why does India want to be in the Nuclear Suppliers Group (NSG)?

    Following India’s 1974 nuclear tests, the US pushed for setting up a club of nuclear equipment and fissile material suppliers.

    The 48-nation group frames and implements agreed rules for exporting nuclear equipment, with a view to controlling the spread of nuclear weapons; members are admitted only by consensus.

    India has been trying, since 2008, to join the group, which would give it a place at the high table where the rules of nuclear commerce are decided — and, eventually, the ability to sell equipment.

    Many countries that initially opposed its entry, like Australia, have changed stance; Mexico and Switzerland are the latest to voice support. India’s effort has been to chip away at the resistance, leaving only one holdout — China. But until China accepts India’s entry, there is no hope of membership.

    Why does the US want India in the NSG?

    The answer lies in the US effort to strengthen the global nuclear non-proliferation regime, whose centrepiece is the 1968 Nuclear Non-proliferation Treaty, or NPT.

    The NPT defines “nuclear weapons states” as those that tested devices before January 1, 1967 — which means India cannot ever be one.

    India — like Israel and Pakistan — thus refused to sign the treaty. From 2005, though, President George W Bush’s administration sought ways to deepen strategic cooperation with India.

    Nuclear energy was a key means to strengthen cooperation, but since India wasn’t a member of the NPT, technology couldn’t be shared. Then, a way forward was found — the US-India Civil Nuclear Agreement.

    India agreed to separate its civilian and military nuclear programmes, and put the civilian part under International Atomic Energy Agency safeguards.

    India also changed its export laws to line up with the NSG, MTCR, Wassenaar Arrangement, and Australia Group — the 4 key nuclear control regimes.

    The US agreed to shepherd India’s entry into these regimes, which meant India would for all practical purposes be treated like an NPT member, even though it wasn’t one.

    Why doesn’t Pakistan want India in?

    The Pakistani argument is that giving India easy access to fissile material and technology for its civilian nuclear programme means it would have that much more material for its military nuclear programme.

    Thus, Pakistan says, the move to give India NSG membership is fuelling a nuclear arms race.

    But this argument falls apart because Pakistan is resolutely opposed to a key international agreement called the Fissile Material Cut-Off Treaty (FMCT), which would cap the military nuclear stockpiles of all countries. The FMCT ought to put an end to Pakistan’s fears, but Islamabad has refused to sign.

    Why has China opposed India’s Bid for NSG?

    Chinese diplomats say Beijing wants NSG entry to be norm-based , in other words, whatever rules govern Indian entry should apply to others too.

    Norm-based entry would, presumably, help Pakistan gain entry, something many in the NSG are certain to resist because of the country’s record as a proliferator of nuclear-weapons technology to Iran, Libya and North Korea.

    Why then did China go along with the NSG waiver in 2008?

    Geopolitics!

    The 2008 one-time waiver allowed nuclear commerce between NSG members and India — the agreement that now allows Westinghouse, and its competitors in France or South Korea, to bid to set up civilian reactors in India.

    The waiver came only after President Bush rang President Hu Jintao and called in a favour. Back then, US-China relations were riding high — on the back of surging trade, and a common vision of how the international order should be structured.

    Today, President Barack Obama and President Xi Jinping are at odds over Chinese muscle-flexing in the South China Sea. The odds of a phone call changing the state of play are next to zero.

    Why does India want to join Proliferation control regimes?

    • India’s membership of the NSG and other proliferation control regimes notably the Missile Technology Control Regime (MTCR), the Australia Group, and the Wassenaar Arrangement is important in order to shatter the myth of it being an “outlier” to the non-proliferation regime as also to facilitate its trade, both imports and exports, of nuclear, missile and other related sensitive technologies.
    • Membership of these regimes will enhance India’s status in this critical area from merely an adherent to a rule maker.
    • It will also enable India to ensure that these regimes perform their mandated role of promoting non-proliferation effectively and not hurt its commercial interests.

    Why India’s recent NSG bid is being criticized?

    • Many experts believe that after the clean waiver of 2008 and the 2011 amendment of the NSG rules (that non-NPT countries would not be entitled to the transfer of the reprocessing and enrichment technology), there is not much merit in seeking a membership of the NSG.
    • The worst outcome of this aggressive bidding was that at NSG forum India’s nuclear regime got hyphenated with Pakistan. It has taken a great deal of effort on the part of successive governments in India to kill the idea of that hyphenation.
    • It suits China ideally to put India in the same bracket as Pakistan. However for India it is diminishing to get itself compared with rogue state like Pakistan who have a dismal track record with respect to Nuclear Proliferation.

    References:

  • Regional Comprehensive Economic Partnership (RCEP)

    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 Transatlantic 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?
    • Key Features of RCEP
    • Comparison of RCEP with other regional Agreements
    • Significance of RCEP for India
    • Challenges in Final negotiation of RCEP
    • Challenges and concerns for India from Joining RCEP
    • Recent point of contention in RCEP negotiation

    source

    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 New zealand.
    • 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:

    (A) 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.
    • 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.

    (B) Commitment levels

    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.

    (C) 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.

    (D) 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.

    (E) Negotiations for investment

    Negotiations will cover the 4 pillars of promotion, protection, facilitation and liberalization.

    (F) Participating countries

    Participants will be ASEAN members and FTA Partners. After the completion of the negotiations, countries other than the 16 states may join.

    source

    Significance of RCEP for India

    • 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.
    • The RCEP agreement would complement India’s existing free trade agreements with the Association of SouthEast Asian Nations and some of its member countries, as it would deals with Japan and South Korea.
    • 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.
    • 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.
    • 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.

    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 5 ASEAN+1 and 23 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. 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 GDP
    • 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.

    Recent point of contention in RCEP negotiation

    • Recently in the 12thround of RCEP talks The members of the Regional Comprehensive Economic Partnership (RCEP) have, in a sort of ultimatum, asked India to either to consent to eliminate tariffs on most products quickly or leave the talks on the proposed Free Trade Agreement (FTA) that is being negotiated by RCEP itself.
    • The members of RCEP are irked by what they think as India’s obstructionist, defensive and half-hearted approach” that is “delaying” the result of the talks
    • Some member countries, particularly 10- members ASEAN bloc, want India to take a long-term approach and consent to eliminate deities (except in agriculture and industrial goods) on a higher threshold within a decade to help India get the benefit of the opportunities arising out of Global Value Chain.

    References:

  • Foreign Policy Watch: India-Iran

  • Foreign Policy Watch: India-Afghanistan

  • Solar Panel Dispute at WTO

    India & US at loggerheads on the Solar Panel dispute

    What is the origin of the dispute?

    In 2010, India launched its national solar programme, which aims at adding 1,00,000 MW of solar power capacity by 2022.

    So, govt. wanted to incentivise the production of solar energy within the country. Therefore, they agreed to enter into long-term power purchase agreements with solar power producers, providing the guarantee for the sale of the energy produced. Thereafter, it would sell such energy through distribution utilities to the ultimate consumer.

    Bone of Contention

    However, there was a clause that a solar power producer, to be eligible to participate under the programme, is required compulsorily to use certain domestically sourced inputs, namely solar cells and modules for certain types of solar projects. In other words, unless a solar power producer satisfies this domestic content requirement, the govt will not ‘guarantee’ the purchase of the energy produced.

    What is India’s argument?

    India principally relied on the ‘govt procurement’ justification, which permitted countries to deviate from their national treatment obligation provided that the measure was related to “the procurement by governmental agencies of products purchased for governmental purposes and not with a view to commercial resale or use in production of goods for commercial sale”.

    India also argued that the measure was justified under the general exceptions since it was necessary to secure compliance with its domestic and international law obligations relating to ecologically sustainable development and climate change.

    What is US’ argument?

    In 2013, the U.S. brought a complaint before the WTO arguing that the domestic content requirement imposed under India’s national solar programme is in violation of the global trading rules.

    It said that India has violated its “national treatment” obligation by unfavourably discriminating against imported solar cells and modules. In other words, India was discriminating between solar cells and modules (which were otherwise identical) on the basis of the national ‘origin’ of the cells and modules, a clear violation of its trade commitment.

    Us has argued that India can achieve its clean energy goals faster and more cost-effectively by allowing solar technologies to be imported from the US and other producers.

    What was the WTO judgment on the issue?

    WTO concluded that India had violated its national treatment obligation, by imposing a mandatory domestic content requirement. The panel found India violated global trade rules by imposing local content requirements for solar cells and solar modules.

    Agreement’s Violated: India violated its commitments under the global trading rules, specifically the General Agreement on Tariffs and Trade (GATT) and the Agreement on Trade Related Investment Measures (TRIMs).

    Explanation: The product being subject to the domestic content requirement was solar cells and modules, but the product that was ultimately procured or purchased by the govt was electricity. Therefore, the domestic content requirement was not an instance of “government procurement”.

    Room for Negotiation

    The verdict was delayed for over 2-3 months, so that India and US can reach an agreement. In this regard, changes were suggested by New Delhi to its solar power programme. India proposed that it would use the domestic content requirement measures for buying solar panels for its own consumption such as by the railways and defence and would not sell the power generated from such subsidized panels for commercial use. However, the US may have rejected India’s offer.

    Why is the ruling being criticized?

    Various environmentalists have criticized the ruling, as it undermines India’s efforts towards promoting the use of clean energy. It threatens the clean energy economy and undermined actions to tackle the climate crisis.

    What is the criticism to India’s stand?

    There appears to be no rational basis for how mandatory local content requirements contribute towards promoting the use of clean energy. If the objective is to produce more clean energy, then solar power producers should be free to choose energy-generation equipment on the basis of price and quality, irrespective of whether they are manufactured locally or not.

    It is also argued that by mandatorily requiring solar power producers to buy locally, the govt is imposing an additional cost for the production of clean energy, which will be ultimately passed on to the ultimate consumer.

    What is alternative in India’s hand?

    Though, the WTO decision may impact the ‘Make in India’ campaign. But, the govt. can give preferential treatment to clean energies in the form of tax rebates for solar power producers, tax breaks, ensuring a strong line of long term credit at low rates, collaborating with global leaders to enhance domestic research and development.

    Future

    The reports indicate that India will prefer an appeal to the appellate body. Simultaneously, India may be exploring the option of filing a counter complaint against the US, as many of its state’s such as Michigan, Texas and California having also reportedly been accused of employing mandatory local content requirements in the renewable energies sector.

    Experts argue that govt should work towards building a business and regulatory environment, which is conducive to manufacturing. The need is for systemic changes in the form of simpler, transparent and consistent laws and effective dispute resolution mechanisms.

    Published with inputs from Pushpendra

  • Trans Pacific Partnership: Latest updates and developments

     

    What is the TPP?

    Trans-Pacific Partnership (TPP) is a trade agreement between several Pacific Rim countries concerning a variety of matters of economic policy.

    The aims of the TPP include the lowering of barriers to trade in goods and services, reducing tariffs to zero by 2015. In addition, the TPP hopes to promote investment and job creation in member states.

     

    How does it come into reality?

    TPP initially called the Trans-Pacific Strategic Economic Partnership Agreement, the pact began as a 2005 trade agreement between Brunei, Chile, New Zealand and Singapore in an effort to integrate their economies, drive growth and create unified regulations.

    In 2008, during the Bush administration, the U.S. joined talks to expand the agreement, along with Australia, Peru and Vietnam. The U.S. trade representative under Obama, Ron Kirk, declared the American interest in forging a broad-based regional pact.

    Then, in 2010, under the new name the Trans-Pacific Partnership, Malaysia entered the discussions, followed by Canada and Mexico in 2012.

    By 2013, Japan began participating in the talks. South Korea and Taiwan have subsequently announced their interest but not formal participation.

    Though all of the negotiating parties belong to the Asia-Pacific Economic Cooperation forum (APEC), the TPP is a separate initiative but with similar goals as APEC’s proposed Free Trade Area of the Asia Pacific.

     

     

    Why the Trans-Pacific Partnership Matters?

    The Pacific accord would phase out thousands of import tariffs as well as other barriers to international trade, like Japanese regulations that keep out some American-made autos and trucks.

    It also would establish uniform rules on corporations’ intellectual property, and open the Internet even in communist Vietnam.

    It eventually would end more than 18,000 tariffs that the participating countries have placed on American exports, including autos, machinery, information technology and consumer goods, chemicals and agricultural products as varied as avocados in California and wheat, pork and beef from the Plains states.

    The trade ministers who negotiated it predicted the overall economic and political heft of the 12-nation group would turn the accord into a model for future trade agreements.

    It would overhaul the system for settling disputes between nations and foreign companies, while barring tobacco companies from using that process to block countries’ antismoking initiatives.

    It also would enforce higher standards for labor conditions and environmental protection, including wildlife-trafficking.

    How will it benefits to USA ?

    Expanding the orbit of U.S. free trade is a major foreign policy goal of the Obama administration, and as a part of its desired international “pivot” toward Asia, it hopes to increase its economic presence in the region.

    Supporters of the partnership say by lowering barriers to trade and increasing avenues for economic globalization, the enlarged $2 trillion zone of diminished tariffs would stimulate employment in U.S. and provide an incentive to invest abroad.

    Agreement hopes to show China that the U.S. will remain a committed economic partner for the nations of the Pacific Rim, without excessively provoking Beijing.

    Who opposes the TPP?

    Opposition to the proposed agreement and to the perceived influence of multinational corporations in the process has been led by public health advocates, labor groups and environmentalists and politicians.

    Some U.S. legislators have voiced concerns that the TPP requirements would prevent access to medicine in developing countries, due to excessive patent protection. Doctors Without Borders argues against “dangerous provisions that would dismantle public health safeguards enshrined in international law.”

    Many activists also focused criticisms on the intellectual property section of the proposed partnership, which, according to WikiLeaks, could have “wide-ranging effects on medicines, publishers, internet services, civil liberties and biological patents.”

    As a trade agreement, the TPP would require House and Senate majorities and then the president’s signature. Domestic American opposition has concentrated their skepticism not just on how “free” the agreement would be but also on problems with the “fast track” congressional voting procedure.

    Japanese producers in the anime and manga industry say the TPP could damage their business by allowing companies to halt imports of intellectual property, in order to protect local distributors of licensed merchandise.

    Rice farmers, as well as beef, poultry and pork producers, have mounted firm resistance to the pact, which would dramatically decrease import tariffs.

    Geopolitically, China is concerned that the partnership is designed to exclude its economic activities, while some American officials have expressed doubts whether the market-oriented pact would ever be compatible with Beijing’s command economy.

    In Europe, analysts view the TPP as a trade regime that could set a precedent for the nascent Transatlantic Trade and Investment Partnership (TTIP).

     

    Published with inputs from Arun

  • WTO Nairobi meet: Updates on the 10th Ministerial Conference

    WTO Nairobi Ministerial Meeting – What’s at stake for India?

    Recently, the WTO Trade Ministers concluded their talks without any commitment on rich countries being asked to check their domestic subsidies. The negotiations exceeded by one day due to lack of consensus among the developed and developing world.

     

    India and other developing countries were particular about the re-affirmation to conclude the 14-year old Doha Round. < Let's begin with the basics of WTO negotiations>

    What is Doha Development Round?

    It is the latest round of trade negotiations among the WTO members, which started in 2001, to sign a pact to open up world trade by lowering or eliminating trade barriers.

    The focus is on helping developing countries join the global marketplace, and boost their economies as a result.

    The Doha Round is also known as the Doha Development Agenda.

    What are they negotiating?

    The goal of any trade talks is to make it easier for goods and services to be bought and sold across national borders.

    The negotiations includes:

    • Restricting countries’ use of subsidies for farmers and fishermen.
    • Lowering taxes and regulatory barriers that affect the cross-border trade in services, such as banking and consulting.
    • Negotiating new intellectual property rules on things such as drugs and copyrighted works.

    Why developing countries are pressing for conclusion of Doha round?

    Basically, the benefits for developing countries depends on the the kind of agreement the negotiators come up with.

    However, the developing countries are hoping that stronger restrictions on farm subsidies in developed countries would be good for farmers in the developing world.

    What was the outcome of 2013 Bali Ministerial Meeting?

    • Protection of the interests of poor farmers and food security.< This is what India wants to be honoured and implemented>
    • Exporters from Least developing countries(LDCs), will get duty free, quota free access to markets in foreign countries
    • Trade facilitation agreement, to ease the customs clearance.

    What is Special Safeguard Mechanism and its need for poor & developing countries?

    Basically, SSM will allow developing countries to temporarily increase the import duties on farm products, so as to counter the sudden increase in imports and price falls.< Actually, the developed countries have well-developed and mechanised agriculture along with that, huge subsidies are extended to farmers in these countries>

    This mechanism would empower the developing countries to impose additional duties on agri-products, when their imports breach specified ceilings or price.

    What’s the problem here?
    The negotiations are on the extent to which different categories of developing countries will be allowed to hike duties using the SSM, beyond their tariff.

    What are the new issues that have emerged?

    1. Rich countries are diluting the development dimension. Some developing countries are attempting to categorise nations such as India and China as emerging economies, instead of developing. 
    2. The developed countries are also redefining the developmental aspects.
    3. Rich countries wanted to revitalise WTO by introducing new issues, often called emerging trade issues:
      • Labour and environmental standards
      • Global value chains and promotion of supply chains
      • e-Commerce
      • Competition & investment provisions
      • Environmental and sustainable goods produced using clean and green energy
      • Transparency in govt. procurement
      • Transparency in state-owned enterprises and designated monopolies

    < If these issues are included in the agreement, developing and poor countries feel that these standards or rules might become non-tariff barriers, hurting their exports>

    What is India’s stand on these issues?

    • India has made it clear that it will not undertake any binding commitments.
    • The issues of labour and environment should be taken at concerned international bodies such as ILO and UNFCCC, not at WTO.
    • India wants new issues should also include those with a development angle such as easier movement of natural persons, such as skilled professionals.

    < Developed countries are fearing large scale migration, on account of increase in skilled manpower in developing countries such as India. India is looking for such concessions so that it's skilled manpower can find access to developed countries market.>

    What was India’s demand at Nairobi Meeting?

    • India wants the rich countries to drastically reduce their trade distorting farm subsidies.
    • India wants on priority that a permanent solution to the issue of public food stock holding in developing countries for the purpose of food security.
    • India is also looking for effective implementation of a package for LDCs including duty-free and quota-free market access.

    What does draft declaration at Nairobi says?

    • A commitment to allow developing nations to use special safeguards to protect farmers against import surges.
    • It reflects India’s demand for a reaffirmation from all members to work towards a permanent solution on public stockholding.
    • All countries agreed to the elimination of agricultural export subsidies subject to preservation of Special and Differential Treatment for developing countries such as longer phase-out period for transporting and export subsidies for exporting agricultural products.
    • Developed countries have committed to remove export subsidies immediately, except for a few agricultural products, and developing countries will do so by 2018.
    • However, developing countries will keep the flexibility to cover marketing and transport subsidies for agriculture exports until the end of 2023.
    • The talks concluded without any commitment on rich countries to check their domestic subsidies.
    • There was division among the WTO members on the issue of the reaffirmation of the Doha mandate.
    • However, some of the WTO members excluding India agreed on the timetable to implement a major deal to get rid off tariffs on 201 IT products valued at over $1.3 trillion/annum, and accounting for around 10% of total global trade.

  • Foreign Policy Watch: India-Myanmar

    India and Myanmar relations: Change in dynamics by democratic triumph

    After decades of struggle, finally democracy triumphed over military junta and Myanmar parliament enters democratic era after 54 years of military rule. It’s time to glance over India-Myanmar relations and how India will be benefited from such stable democratic government.

    India and Myanmar have traditionally had much in common, with cultural, historical, ethnic and religious ties, in addition to sharing a long geographical land border and maritime boundary in the Bay of Bengal. Let’s see it in brief!

    How did India and Myanmar engagement begin ?

    • Myanmar is India’s bridge to east, and an important ally for growing its regional power.
    • India and Myanmar’s relationship officially got underway after the Treaty of Friendship was signed in 1951.
    • For many years, India did not open up to the authoritarian regime, and it was only over a period of time that India started engaging with the military junta of Myanmar.
    • The region’s focus has revolved around the SAARC countries and China, Myanmar is becoming increasingly important for India in both a strategic and economic context.

    What about bilateral trade ties?

    • Bilateral trade has grown from $12.4 million in 1980-81 to $2.18 billion in 2013-14.
    • Agricultural items like beans and pulses and forest based products make up nearly 90 percent of India’s imports.
    • Myanmar is also the beneficiary of a duty-free tariff preference scheme for least developed countries (LDCs).
    • Both countries also signed a border trade agreement in 1994 and have 2 trade points along their 1,643 km border.
    • India has also promoted some trade events such as the India Product Show 2012, which represented 19 Indian companies.

    But, How shared cultural links promote unique relations between both countries?

    • The two countries have shared cultural exchanges through various cultural troupes.
    • One such exchange was in 2009 when Myanmar sent a 13 member student group that attended a SAARC cultural festival in India.
    • This was followed by another major event at which the Indian embassy in Yangon organized the annual Indian Film Festival, which is a major event on the Yangon cultural calendar.

    Does India have historical bond with Myanmar?

    • Yes! Yangon was once a center for India’s independence struggle.
    • The Indian National Army (INA), formed by Indian nationalists during World War II in 1942 with the motto of Ittehad, Itmad aur Qurbani (Unity, Faith and Sacrifice).
    • Comprised over 40,000 soldiers, who fought valiantly against the British imperialist forces.
    • Netaji Subhas Chandra Bose became leader of the INA in 1943 and undertook a groundbreaking march towards Indian territories from Burmese soil with the aim of achieving Indian independence.<This time we can expect question on Netaji and his work, as we know current happenings about Netaji’s files declassified>
    • General Aung San, Burma’s independence hero, was a close friend of Netaji, the supreme commander of the INA.
    • That friendship was reflected in cordial relationship between the soldiers of the INA and their counterparts in the Burmese National Army (BNA).
    • So, it’s good to use this historical bond for building more coherent and strong relations with Myanmar.

    How Myanmar is Strategically significant to India?

    • Myanmar is strategically important to India as it is the only ASEAN country that shares a land border with India.
    • It is also the only country that can act as a link between India and ASEAN.
    • Myanmar is India’s gateway to Southeast Asia and could be the required impetus to realize India’s Look East Policy.
    • India has also decided to upgrade the Kalewa-Yargyi road segment to highway standard.
    • Myanmar would develop the Yargyi-Monywa portion, and this would help to connect Moreh in India to Mae Sot in Thailand via Myanmar.
    • This in turn would improve India’s connectivity and relationship with both Myanmar and Thailand.

    How can India become regional pivot in Asia?

    • If India is to become an assertive regional player in Asia, it has to work toward developing policies that would improve and strengthen it domestically.
    • This will encourage more confidence in its ability to lead the region and be an important global player.
    • Competition with China should also be considered and taken seriously. As China’s growing influence in the region would lead to a more one-sided dynamic in the region.
    • China has asserted itself through its soft power as well as through its trade and economic relations with Myanmar by taking up large infrastructure projects in the country.
    • India on the other hand needs to use its soft power more effectively, and at the same time strengthen itself domestically and regionally.

    What are advantages that India has over China with regard to Myanmar?

    • One is the democratic process, which results in different governments at the center and states through free and fair elections.
    • There is also the respect for institutions that are strong enough to hold the country together.
    • Finally, cooperation in different multilateral forums such as ASEAN and BIMSTEC strengthen the relationship between the 2 countries.
    • Apart from these reasons, India has sent a clear signal that while economic ties are important, it is keen to build a holistic relationship and is prepared to assist in institution building in Myanmar.

    What is the significance of Connectivity in India-Myanmar Relations? 

    <How North-Eastern region can play vital role in this?>

    • Myanmar’s vast oil and natural gas reserves and other resources make it a natural partner for many countries in the world.
    • India, being its next door neighbour, cannot be indifferent to this reality.
    • Besides, geo-political considerations, historical and civilizational links, and the ethnic overlap across their borders, have all come together to make India’s North-East the land bridge between the South and South-East Asia through Myanmar.
    • The 1,640 km-long border between Myanmar and the Indian states of Arunachal Pradesh, Nagaland, Manipur and Mizoram signifies the importance of this eastern neighbour for India.
    • India expects to reap various economic benefits by bolstering bilateral trade and investment, which critically depends upon better connectivity in the region.

    How bilateral cooperation agreement gives impetus to India’s Look-East Policy?

    • The strategic location of Myanmar is pivotal to India in reaching out to the economically vibrant South-East Asian countries.
    • India’s Look-East Policy envisages building infrastructure and expanding the transportation network including railroads, aimed at furthering surface connectivity in the region.
    • It is recognized that in addition to more economic contacts, such connectivity will promote social stability in the region by facilitating people-to-people contact amongst trans-border ethnic groups.
    • It is expected that insurgent outfits would lose their recruitment base once the local resources begin to be exploited and employment is generated leading to overall development. 
    • Concrete economic benefits are expected to come up in the region with establishment of border haats.
    • In addition, internal trade routes have the potential to enhance accessibility to sub-regional markets that connect Bangladesh, Myanmar and Bhutan.

    Way forward

    • The basic foundation for the relationship between India and Myanmar has been laid by previous governments, the onus is on the present Indian administration to demonstrate that it can take the relationship to a higher level.
    • India can become a strong regional player through a more proactive approach, cement India’s place in the region and grow into a powerful, global country.

     

     

    Published with inputs from Arun

  • Foreign Policy Watch: India-Pacific Island Nations

    What are Pacific Island Nations (PINs)?

    • These are 14 island countries in Pacific Ocean – Cook Islands, Fiji, Kiribati, Marshall Islands, Micronesia, Nauru, Niue, Palau, Papua New Guinea, Samoa, Solomon Islands, Tonga, Tuvalu, and Vanuatu

     

    • These countries range in land area from the largest Papua New Guinea (461,700 sq km) to the smallest Nauru (21 sq km)
    • The size of their population ranges from Papua New Guinea (7.7 million) to Niue (1,500)
    • Development indicators also vary widely with per capita income ranging from USD 27,340 (Cook Islands) to USD 1020 (Papua New Guinea)

    Why study about PINs?

    • On August 21, 2015 India hosted the second edition of Forum for India-Pacific Islands Cooperation (FIPIC) summit in Jaipur
    • All the 14 nations of the group participated in the summit
    • So obviously, this becomes an important topic for exam and you cannot ignore this as an unimportant grouping

    Importance of the Pacific area:

    • Though these countries are relatively small in land area and distant from India, many have large exclusive economic zones (EEZs), and offer promising possibilities for fruitful cooperation
    • The Pacific Ocean is the earth’s largest ocean covering 46% of water surface and 33% of the earth’s total surface, making it larger than the entire earth’s land area
    • It is bounded by 41 sovereign states plus Taiwan, and 22 non-independent territories
    • It is rich in marine resources and accounts for 71% of the world’s ocean fishery catch
    • The Pacific has for long been an area of geostrategic interest for countries such as the US, Japan, China, Russia, Australia, and Indonesia – large economies which lie on its boundary
    • Two developed Pacific Island countries – Australia and New Zealand – have tended to dominate regional cooperation forums such as the Pacific Islands Forum (PIF)

    Issues with PINs:

    • They are dispersed and low populated countries
    • They have logistics problems to develop their economies
    • Less manufacturing activity
    • With climate change and global warming, these countries fear of being drowned or disappeared
    • Their natural resources are being depleted day-by-day – sugar, timber etc.
    • India used to import phosphates from the Nauru Island, which is now being depleted
    • Problems in sugar market due to global vagaries

    External influences:

    #1. Australia: These countries are highly influenced by Australia due to its close proximity – for example, Australia helping the development of natural gas of Papua New Guinea etc.

    #2. China

    • China has significantly expanded its foothold in the region, from increasing business and trade ties to setting up diplomatic missions in each of these countries
    • More than 3,000 Chinese companies are already operating in these Island groups in various businesses.
    • China is now the largest bilateral donor in Fiji and the second largest in the Cook Islands, Papua New Guinea, Samoa, and Tonga
    • Last year, China provided around $2 billion credit to these nations collectively
      6 out of 14 Pacific Islands recognize Taiwan as a legitimate govt of China
    • Taiwan is already holding annual meet with these countries to engage them

    #3. These island groups are forming partnerships with EU and other economic groupings

    Where can India engage?

    #1. UNSC: These 14 nations are supporting India’s attempts to become permanent member of UNSC

    #2. Agriculture:

    • These are agriculture oriented economies
    • Major products- palm oil, sugar, and timber
    • We can do value addition to their products- copra, sugar, timber
    • They are diversifying in oil production and we are short on edible oil so this is a major area to work on
    • India can make use of the mahogany (timber) that is extensively grown in these islands, for getting raw materials for paper industry

    #3. Minerals:

    • These islands have plenty of oil, gas, and minerals in their sea beds
    • For example, the Kiribati islands, they are spread over an area that is bigger than the Indian subcontinent and have rich sources of minerals
    • India can form joint ventures and explore these minerals

    #4. Disaster Management: These islands are frequently affected by natural disasters like typhoons, earthquakes etc. India can help them in disaster management

    #5. Services sector:

    • The other biggest potential area which India can leverage from these islands is the development of services sector – IT, tourism, healthcare and fisheries
    • We can explore tourism options to these isolated beautiful spots
    • Tourism also has an advantage from the fact that there are large number of ethnic Indians in these islands
    • Many of these countries send their nationals to India for education though programmes sponsored by the Indian Council of Cultural Relations

    #6. Energy:

    • India is developing renewable energy and has set a target of 175 GW by 2022. It can help the Pacific Islands in this area and provide energy security
    • We can transplant our experience of A&N islands in establishing isolated energy grids in these countries
    • There has been lot of tree cutting for industrialisation and they are using more diesel for power. We can help them by providing assistance in renewable energy

    #7. Democracy:

    • In the past, these pacific islands have faced a threat to democracy
    • For example- there was a coup in Fiji which overthrew the democratically elected government, there was a civil war in Papua New Guinea
    • In this context, India can serve as a stable and solid partner, as it is one of the largest democracies in the world, so that these islands can have an assured trade and investment relations.

    #8. Ethnicity:

    • Unlike other proximate countries like Australia, India has intimate relations, going beyond exploration of natural resources, with these nations
    • Culturally they are linked to India. For example, Fiji has huge number of Indian ethnic population
    • We should leverage this advantage to engage & establish more intimate relations

    #9. Climate Change: India should fight for their cause in the coming UN Climate Change meetings & should see to it that these islands get enough finances for disaster mitigation

    #10. The Pacific Island groups have enthusiastically welcomed India’s offer in telemedicine, tele-education, space cooperation, fostering democracy and community activities

    #11. These countries are in need of MSME and we have good experience in developing them

    FIPIC:

    • The Forum for India–Pacific Islands Cooperation (FIPIC) was launched during PM’s visit to Fiji in November 2014

     

    • FIPIC includes 14 of the island countries – Cook Islands, Fiji, Kiribati, Marshall Islands, Micronesia, Nauru, Niue, Palau, Papua New Guinea, Samoa, Solomon Islands, Tonga, Tuvalu, and Vanuatu

    Why FIPIC?

    • Though these countries are relatively small in land area and distant from India, many have large exclusive economic zones (EEZs), and offer promising possibilities for fruitful cooperation.
    • India’s focus has largely been on the Indian Ocean where it has sought to play a major role and protect its strategic and commercial interests
    • The FIPIC initiative marks a serious effort to expand India’s engagement in the Pacific region
    • At this moment, total annual trade of about $300 million between the Indian and Pacific Island countries, where exports are around $200 million and imports are around $100 million
    • This is a part of India’s extended Act East Policy

    Summits:

    #1. Suva, Fiji:

    • One of the key outcome of the first summit in Suva, Fiji was that top leadership of both India and Pacific Islands decided to meet at a regular interval and an annual summit was instituted in this regard
    • Other areas- visa on arrival for their nationals, funds for small business, line of credit for a co-generation power plant for Fiji, and a special adaptation fund for technical assistance and capacity building for countering global warming

    #2. Jaipur, India:

    • India announced to convene international conference on blue economy in New Delhi in 2016 and invited all the experts form the island nations
    • Set up Space Application Center, in partnership with ISRO, in any of the 14 countries and friendly port calls by the Indian Navy
    • Pacific leaders have expressed their concerns over climate change and its effect on their respective counties. India also assured them to voice their concerns and appropriate measures at the 2015 United Nations Climate Change Conference (COP 21) in Paris
    • In return all the 14 visiting head of state/government reiterated their support to India’s bid for a permanent memberships at the reformed United Nations Security Council
    • India offered to help the Pacific Islands with their hydrography and coastal surveillance, by engaging the Indian Navy. It would help them have a better understanding of their maritime zone and strengthen security of their EEZs
    • India also announced FIPIC Trade Office at Federation of Indian Chambers of Commerce & Industry (FICCI) to promote Trade & Investment opportunities between India & Pacific Island Countries

    Way ahead:

    • China is already on there and giving large credit, so does it mean India can not build good relations with these nations? No
    • We need to build on our advantages- health tourism, building democratic institutions which they need a lot
    • India’s strong relations with Fiji, which has considerable influence in the region, is a strong point which could help counter the growing Chinese influence
    • Relations with Fiji had improved in India’s favour in the past decade and not only those of Indian origin but also Fijians were friendly towards Indians, which worked to Indian advantage
    • Most of the economies in the region are based on agriculture, fisheries and small-scale industries and India’s capacity in these sectors is even better than Europe and China
    Published with inputs from Swapnil

  • Foreign Policy Watch: India-SCO

    SCO & India

    As of July 2015, India has been accorded full membership of the Shanghai Cooperation Organisation (SCO) along with Pakistan at its Ufa summit held in Russia.

    • SCO is a Eurasian economic, political and military organisation
    • HQ: Beijing, China
    • Established: 2001 in Shanghai by the leaders 6 countries viz. China, Kyrgyzstan, Kazakhstan, Russia, Tajikistan, and Uzbekistan
    • Since 2005, India was having an Observer status of SCO and had applied for full membership in 2014. India would be finally ratified in the member list by 2016

    Connecting the dots with SCO

    Per Chinese and Russian scholars, creation of SCO helped address the security problems and enhance economic cooperation in the Central Asia region. The Western discourse, however, has tended to see the SCO as a mechanism to counter-balance the influence of the United States in the region. Both are correct!

    SCO is considered and tagged as anti-west. Behind the veils, it is alleged that SCO is going to be a NATO like military alliance in East. You might expect a question on that line and be asked to put India’s context in place.

    However, China exaggeratedly says that the SCO was founded on a principle of non-alignment and functions as an effective stabilizer for regional security and peace. China has always maintained that the focus of SCO is on combating the “three evil forces” – terrorism, separatism, and extremism – and other unconventional security menaces.

    Advantage India?

    There are multiple benefits for India as well as the SCO which is concerned with security and stability in the Eurasian space.

    1. India’s presence will help moderate the anti-West bias of the grouping, which will calm Washington’s nerves to a considerable extent
    2. Greater engagement with India will also aid the organisation’s capability to improve regional economic prosperity and security
    3. Membership will give India an opportunity to play an active role in China’s Silk Road initiative which plans to link a new set of routes from the north and east of the country to an old network of routes in the greater Eurasian region.
    4. Indian interest in International North-South Transport Corridor to connect Mumbai with Abbas port in Iran. This route is shorter than the existing Suez Canal and the Mediterranean Sea
    5. SCO may also serve as guarantor for projects such as the Turkmenistan-Afghanistan-Pakistan-India (TAPI) and Iran-Pakistan-India (IPI) pipelines, which are held by India due to security concerns.

    India’s entry is also likely to tip the balance of power in favor of peace and stability in Afghanistan.

    Challenges ahead for SCO?

    It is naive to expect that India’s differences with China regarding the border or its ties with Pakistan will magically disappear. The inclusion of Pakistan in the SCO will also make it difficult for India to enjoy a level playing field.

    Pakistan, which is embroiled in a domestic political crisis, may not be so willing to challenge hardliners in its country, and go along with India in promoting peace and stability in the Eurasian space. We have seen how Indo-Pak presence in SAARC makes it difficult to ink key pacts.

    The clash of interests in a post – 2014 Afghanistan makes prospects of cooperation difficult. There is also a possibility that China may collude with Pakistan to suffocate India’s voice in the decision making process.

    Other than that, India will have to balance the geopolitical ambitions of China and Russia to evolve a mutually beneficial framework.

    Further readings:

    SCO becomes a reasonably hot topic post India’s accession to the member status. If you are comfortable with IR, try these articles  –