We need a separate trade department

Business Standard, December 07, 2006

By Pradeep S Mehta

More specialised and experienced people are needed to deal with international trade policy matters, perhaps civil servants appointed for the job on a permanent basis.

Even before the suspension of the Doha Round of the WTO, India has been pursuing several bilateral and regional free trade agreements with countries which appear more promising for our international trade prospects. All this is being handled by a handful of overloaded civil servants in the Department of Commerce, many of whom are new to the trade policy scenario. In fact, even the Indian WTO mission in Geneva has many fresh officers, who are wetting their beaks. However, one must admit that the civil servants who are given the responsibility are competent and good, even if they are not experienced in the subject matter, and thus, we are able to carry forward our agendas. But that is not sufficient. The problem is in the system, and thus, there is a need to look at it with an out-of-box approach.

Precisely, in order to address this problem, the Parliamentary Standing Committee on Commerce in its visionary report of December, 1998, had recommended: “In view of the complexities likely to visit both international trade and international trade negotiations, the government should considerably strengthen its infrastructure for undertaking global trade negotiations. The Committee recommended the establishment of a separate Department of International Trade and Trade Diplomacy under the umbrella of ministry of commerce with a substantial contingent of professionally competent personnel on its staff.” The same view was reiterated by this writer in his submission before the same committee in December, 2005. Alas, the government has not responded to it, as yet.

The systemic problem is that in our governance system, a civil servant cannot be posted in one place for more than five years. Thus, we have officers who learn quickly, but by the time they have become mature, they move on to another department or revert to their states. There are pros and cons to the system. One argument is that by transferring the person after his tenure is over, vested interests are not created. However, what is lost is the memory and skills the person acquires as a result of the job experience. More importantly, in international negotiations, networking and knowing one’s counterparts from other countries is a great advantage. Quite often, though not always, a personal contact can turn the table in favour of our own positions.

Other than the problem of shifting officers, in the present Trade Policy Division, there is no permanent mechanism to involve experts in trade negotiations. This is done more on an ad hoc basis, because of which they are insufficiently prepared and equipped to deal with trade negotiations, and thus, get into odd situations.

In the area of international trade affairs, most developed countries, on the other hand, have a separate department with highly specialised and experienced persons in their ministry to deal with international trade policy matters, especially negotiations in the WTO as well as various bilateral and multilateral trade agreements. For instance, in the US, trade negotiations are handled by the US Trade Representative, while the Commerce Department deals with commerce per se. In some countries, foreign ministries take the lead. Brazil, Chile and Mauritius have an effective and high profile trade policy operation system.

At present, the Department of Commerce has many functional divisions of which trade policy division is one, which needs immediate attention for better development of our trade negotiations. It formulates and implements the foreign trade policy, and is also entrusted with responsibilities relating to multilateral and bilateral commercial relations, state trading, export promotion measures and development and regulation of certain export-oriented industries and commodities.

Fitting trade priorities and policies into this process is part of the problem — and at times, looks to be an insurmountable problem. Therefore, it is suggested that there should be a separate department under the ministry of commerce to deal with international trade of the country, supported by experts who are experienced negotiators and well trained in this area. Instead of the present cadre of Department of Commerce that is dealing with trade policy matters, I suggest a separate cadre, as the present system does not provide enough space and scope to appoint trade policy experts on a permanent basis. An Indian Trade Service has been created, but it doesn’t have the same standing as the IAS, and thus is not in an effective position in the hierarchy.

The overall objective should be that ministry of commerce speaks for the system as a whole, as broadly understood, with the confidence and assurance that a deep comprehensive consultative procedure alone can bring. To achieve this, it is suggested we have a separate department of decision-making procedures only for international trade policy-making. In fact, some of the civil servants who have served in the trade policy division successfully, should be offered a permanent job, rather than be subjected to the civil service rules of not staying in one post for more than five years. In my own experience, many of such officers have done extremely well. This would enhance efficacy, as capable people are most likely to work with full vigour in meeting the objectives.

If this out-of-box suggestion is considered seriously, then it would enable us to have better trade negotiations with other countries, imbued with transparency of dealing with trade matters of the country. In the end, it would help expand international trade, and ensure better trade relations with other countries.

The author is Secretary General, CUTS International, a leading research, advocacy and networking group and can be reached at psm@cuts.org

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