RCEP Trade Deal: the New Gun Boat Diplomacy? Will it Fit in Atma Nirbhar Bharat? 

A new swadeshi movement of 21^st century through “Atma Nirbhar Bharat” in the height of Covid19 pandemic

On June 8, 2020, it could be said that most of the economic activities have begun.  The consumption of India declined to 40% in the April 2020.  The partial opening up of activities had further pushed up the economic engine of the country but it is not to the level that of pre-covid19.  We would remember, by September 2019, the newspapers were carrying scary stories such as economic distress, declining capacity utilization and growth, unemployment, NPA, etc. The editors, statisticians and economists were busy in benchmarking economic growth with various periods before precovid19.  Finance Minister announced the stimulus packages in September and October 2019 to address such problems.

Now the same editors, statisticians and economists are busy in writing about number of theories and analysis floating on different shapes of economic recoveries such as V, W, etc. The reality is that two factors are common for everybody – fear and uncertainty. So there is a cautionary motive to save among the consumers. The fact is that Indian businesses are reeling under all time low due to reduced consumption during this pandemic period. The economic recovery and activities is going to be a process of rebuilding a home.  It is a block-by-block process.  The resurrecting of economy back is not to benchmark with any recovery shape or levels, but should be about protecting livelihood of common people, safeguarding capital of businessmen and adequate collection of tax to the exchequer for the efficient function of government. 

RCEP Secretariat has given an option to India that it can defer the implementation of the commitments in order to move forward in the deal. Deferment is just postponing the problem but not eliminating it. India needs to ask RCEP countries on tangible proposal in terms of market access to rebuild the economy block by block.  Until India does not receive tangible and minimum market access, it may not be a viable proposition to commit an international agreement containing a text with “imbibed opportunities” and “twin edged interpretations” at this lowest point of economic life. We need to translate the trade agreement into a tangible number in view of export opportunities for India and import concessions to be given to the trading partners.  When Dunkel and Sutherland were negotiating the Uruguay Round Agreement, it was the end of a cold war, collapse of USSR and finally established the unipolar hegemony of USA through first Gulf war. In 1990, India was in precarious balance of payment position leading to mortgage India’s gold in London.  If any one goes through the Parliament debate of 1992, 1993 and 1994, it is crystal clear that the ratification of WTO Agreement by parliament was rushed without any discussions by a coalition government due to the economic weakness of that time. Twenty five years ago Shri. Ganesan, Former Commerce Secretary, would not have thought that it is going to impact on agriculture product MSP, Food Security, etc. There could be an argument that India had gained from The Uruguay Round Agreement. But at what cost? India lost its pharmaceutical manufacturing between 1995 and 2020 though WTO advocates anti-dumping and safeguard regime. Even till date, the commitments on Agriculture and Export Subsidy in the WTO agreement are the thorns in the foot of India.

Though India is one of the largest users of anti dumping duties in the past, it was unable to protect industries due to different work culture and business environment in comparison to other countries. Inefficiency should not be protected but genuine issues are to be addressed. Anti dumping is currently an inefficient tool due to lack of minimum linkage with GATT Article XXVIII on tariff renegotiation. A respected trade union leader said that bureaucrats in Commerce Ministry are always keener to provide market access for foreign goods rather than protecting domestic manufacturing. I said yes they are keen in export promotion so they need to conclude trade agreements. Further, I said that it is the duty of industry and other ministries to look into the matter in view of protecting domestic industry. Unfortunately, other ministries have not build up expertise to decode trade agreements to strike a fine balance between export promotion and import protection.  

Commerce Ministry should move from free trade to fair trade principles in letter and spirit now. This is the moment to protect Indian jobs and industry from cheaper imports. Local manufacturing does not mean screw-driver technology of assembling the imported products in India. But it is moving up in the value chain. The delisting of foreign products by government canteen is certainly a new gesture. Big question is, will the parliament and the parliamentarians accept the swadeshi standards? Will India develop Swadeshi Standards for products? The classification of Taiwan status in FDI by RBI might pave a new direction in geo-economics. The support provided by the way of import substitution policy to Indian industry should revolve around the principles of encouraging local production and its support to export industries through inter-linkages and cross subsidization to gain competitiveness. The ceiling binding tariff committed during the Uruguay Round of WTO is irrelevant due to the sea change in technology and climate commitments.  The trade liberalization is to be revisited in terms of technology and geopolitical developments.

 A news article stated that some MNCs would relocate export production from India to Vietnam if India does not ink RCEP. The offset in loss of exports is to be seen in “numbers” rather than conceptually.  It is now prudent to lay down rules on foreign companies linking domestic market access and exports citing rationale of public health emergency and job loss though WTO incompatible. India is required to ascertain new and emerging barriers due to the Covid19 issue in the movement of personnel, which is the key area of India’s interest in Service sector. As most of the economies have significantly contracted during and post Covid19 pandemic period, the pre-covid19 market access opportunities offered are irrelevant in RCEP deal. Specific export opportunities and import concessions during this pandemic period could be the mantra to manage the mutual interests of trading partners.  It is to be remembered that the lead country of RCEP agreement is China. In the border or LAC, China is posturing or war mongering for last few weeks in addition to export of Covid19 virus to Bharat. Is China laying trap through border posture to bring India in RCEP table diplomatically? Or is there going to be a new and 21^st century Molotov–Ribbentrop Pact?

Rightly, PM Modi refused to sign the RCEP deal in November 2019. Now India is different in comparison with that of 1994 in view of economic and social strength to be self sufficient and also have a strong government with a mandate to protect livelihood and Bharatiya culture. It is for sure that the solution is of course Swadeshi or Atma Nirbhar Bharat for protecting employment or livelihood and Indian business.

An article “The Boycott China Mirage” from the views room of the Business Line dated of 3^rd June 2020 says that the campaign of boycotting Chinese goods is impractical, uneconomical and inconvenient at an individual level. Any social and political movement in its initial period begins with difficulties and sacrifices of masses for the larger gain of the society. Let us not suspect Bharat’s ability to withstand the inconveniences and resurrect industries. It will be a baby step but surely it will move strength to strength.  Baba Ram Singh Kuka, a Namdhari Sikh Sect leader, was the first person to pronounce the call of Swadeshi in 1872. Later, Mahatma Gandhi gave the call to reject all foreign goods during the Swadeshi Movement in the freedom struggle of India. India has forgot the path of Swadeshi policies of Mahatma GandhiJi for pretty long period, except for Khadi. PM Modi has now announced the new swadeshi movement of 21^st century through “Atma Nirbhar Bharat” in this height of Covid19 pandemic. The self-sufficiency is the need of the hour in order to protect livelihood of millions of our countrymen.