THE-GIST-of-Editorial-for-UPSC-Exams : 17 January 2020 (Bilateral agreements are more desirable than multilateral deals (Mint))

Bilateral agreements are more desirable than multilateral deals (Mint)

• Mains Paper 2: International Relations 
• Prelims level: RCEP
• Mains level:  Bilateral trade, grouping and free trade agreements

Context:

• Since 1991, the narrative has been created that the policy of free movement of goods and capital across nations and amending IPR laws to suit investors is the panacea of all ills for developing countries.
• In India, too, it was thought that with such a policy, Indian industry would become competitive, flow of investment would improve, thus making the IPR regime stronger in favour of the owners that will help innovations.

Background:

• To freeing trade in goods from tariff and non-tariff barriers, instead of making Indian industry generally more competitive.
• This had led to deindustrialization in many sectors and a manifold increase in import dependence in general, leading to a constantly multiplying trade deficit, especially after the entry of China in the World Trade Organization (WTO). 
• It is notable that India’s trade deficit increased from $6 billion in 2000-01 to $176 billion in 2018-19.

Opting out from RCEP:

• The decision to walk out of RCEP raises doubts about the future of free trade agreements (FTAs), including the FTA with the EU. 
• In the past, opposition to India-EU FTA was similar to those of RCEP, such as on non-agriculture market access, agriculture, IPR, and investment.
• The same arguments that were being given in support of RCEP are back in the narrative in favour of an India-EU FTA.
• These include that the country cannot live in isolation, that this FTA would improve competitiveness of Indian industry and that the export potential of agriculture would also improve, and that IPR related clauses, which are actually proposed by EU, would encourage innovation.
• The bizarre argument in favour of MTAs and RTAs is that they save nations from negotiating with other individual nations. 
• However, 72.6% of India’s imports are from merely 15 countries and 60.5% of exports go to just 15 countries.

Prioritising in local trade:

• Therefore, making trade deals with major trading partners is not a big exercise. 
• Rather, it gives us an opportunity to increase our trade relations with countries where our penetration is less, by making agreements with them and also helps us make diplomatic inroads there.
• It is always a good idea to negotiate with our trade partners and have a trade deal, based on mutual needs, competitiveness and local requirements. 
• The Swadeshi Jagran Manch has always been in favour of bilateral trade agreements rather than MTAs or RTAs. 
• This approach has given us an opportunity to negotiate on the basis of mutual needs and cost benefit analysis on sound basis, rather than projections.

Way forward:

• FTAs would lead to India becoming a part of the global value chain, which again is generally fallacious. 
• We must not forget that the essential condition for India becoming a part of the global value chain is not FTAs but ease of doing business. 
• We need to make special efforts by carefully making agreements with our trade partners wherever possible and entering into bilateral agreement and make special efforts to improve our competitiveness. 
• We need to work out a deal that is a win-win for all sectors, including manufacturing, agriculture, and dairy, and all people including workers, farmers, and small business

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General Studies Pre. Cum Mains Study Materials

Prelims Questions:

Q.1) With reference to the voting at the GST Council, consider the following statements:
1. As per The Constitution (One Hundred and First Amendment) Act, 2016, in case of a voting, every decision of the GST Council has to be taken by a majority of not less than three-fourths of the weighted votes of the members present.
2. The vote of the central government has a weightage of two-third of the total votes cast.

Which of the statements given above is/are correct?
A.   1 only
B.   2 only
C.   All the above
D.   None 
 

Answer: C
Mains Questions:
Q.1)  What are the major challenges for India in trade sector after walking out from the RCEP agreements? How prioritizing the local trade would became effective to boost the economy?