India’s trade policy must learn lessons from the past, not repeat it: Experts

The Economic Times, March 30, 2024

India needs to be active and not reactive in international trade policy, and show greater engagement and leadership in trade rule-shaping, keeping in mind the goal of becoming a developed country, Viksit Bharat, by 2047.

The world has transformed since the WTO came into being in 1995 and India can no longer afford to hold on to positions it took 30 years ago. As commented by many, this is India’s century.

This was the broad sense of a group of trade policy experts who gathered for a closed door Roundtable on March 29 in New Delhi on India’s trade policy, organised by global public policy body CUTS International.

The Roundtable was chaired by Montek Singh Ahluwalia, former Deputy Chairman, Planning Commission of India and moderated by Pradeep S Mehta, Secretary General, CUTS International.

It was discussed that leadership in international trade policy requires a delicate balancing act between advancing negotiating positions, building alliances and protecting our own interests.

For example, leadership at the WTO will require deftly navigating an institution whose foundations are themselves undergoing significant evolution.

Participants felt that India will have to work hard to dispel notions that it is locked in a developing country mindset on trade. A futuristic vision combined with ground level interventions are the need of the hour.

This will require rethinking trade policy in a dynamic way as well as addressing a range of flanking issues that make trade more burdensome. Parallel efforts are therefore needed in terms of evolving medium-to-long term trade strategies while at the same time improving domestic capacities.

Likewise, it was opined that having a set of well articulated offensive interests in trade is a prerequisite for achieving the ambitious trade-related goals India has set for itself.

Some former trade negotiators, while recognising that adopting hard negotiating positions is unavoidable at times, stressed that such positions should be reserved only for the most important interests we wish to secure.

Experts also felt that achieving coherence between bilateral and multilateral trade negotiation tracks and among domestic economic policies has become increasingly important.

For example, while India has shown greater inclination to discuss trade-related/non-economic issues in bilateral discussions, it remains averse to them being taken up at the WTO.

On the same lines, they called for greater coordination within the various wings of the Department of Commerce, as well as greater inter-Ministerial coordination on trade policy issues.

Another important element discussed was the need to cultivate an evidence-based discourse around trade policy in India. Grooming expertise in trade law and trade economics in India’s universities needs to be done in a mission mode.

For example, the Commerce Ministry can establish WTO Chairs in Indian universities which will generate useful research inputs into our trade policy making and also build an active stream.

Similarly, greater openness to engaging experts not just for consultation, but to actually participate in specific negotiation tracks needs to be explored.

Most rich countries bring in hordes of observers in the negotiating room, who then are able to not only develop their capacities but also offer good advice to negotiators.
There was a lively discussion on India’s stance on the Joint Statement Initiatives (JSIs) at the WTO. JSIs are discussions on specific issues taking place in smaller groups of the WTO membership, on issues like electronic commerce and investment facilitation.

While some felt that India should lift its opposition to the JSIs and be more open to variable geometry, others saw broader interlinkages between trade, economic security and national security as justifying India’s stance of staying out.
It was recognised that there are now greater conversations between the government and industry on trade policy related matters, which needs to be sustained. However, these need to be structured as was done in the past.

The Minister can recreate the national trade policy advisory committee with representatives of industry, media, civil society and former trade negotiators to give him regular advice.

However, these still need more equitable representation from SMEs in the process, who are significantly affected by trade policy changes.

It was also voiced that ease of running a business continues as a chimera, while SMEs suffer from brunt of hurdles during their operations. Examples of overlapping nomenclatures, such as bed sheets and bed linen, were given to show how customs staff create more problems than find solutions. Unless this is addressed resolutely our competitiveness will continue to suffer.

Overall, the Roundtable provided a platform for the free and frank exchange of views among a group of people closely invested in India’s trade policy and economic development. Attendees commended CUTS for organising the event.
While there were differing views on details, all those present in the room shared a common objective – on how trade can be harnessed as a vehicle for India’s development.

As a way forward, the group decided that CUTS should prepare a White Paper on the basis of the discussions and share it with the PMO, NITI Aayog, Union Ministries and State Governments.

Many former Indian trade negotiators and eminent trade policy experts participated in the roundtable including G. K. Pillai; Ujal Bhatia; Anwarul Hoda; Harsha Vardhan Singh; Veena Jha; Dammu Ravi; Gopal Agarwal; Ashwani Mahajan; Sumanta Chaudhury; Bipul Chattopadhyay; Navneet Sharma and young scholars like Advaiyot Sharma; Prabhash Ranjan and R V Anuradha.

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