Brookings India hosted a private roundtable discussion on “India’s Multilateral Trade Diplomacy” featuring Mr. Pradeep S. Mehta, Secretary General of CUTS International, and Dr. Harsha Vardhana Singh, Executive Director of Brookings India. The discussion was chaired by Ambassador Shivshankar Menon, Distinguished Fellow at Brookings and India’s former National Security Advisor and Foreign Secretary.
Indian dependence on the global economy has grown exponentially in the last 30 years. It has been forecast that by 2030, India will have the second-largest consumer middle class in the world, with very high consumption needs. If domestic production is inefficient, or unable to meet the needs of consumers, India will have to rely more heavily on imports. The importance of trade in this context cannot be downplayed.
India’s multilateral trade diplomacy faces several challenges. There are significant capacity constraints, possibly a factor of negotiating too many trade agreements. India should instead focus on a few key countries, and be realistic about what it can accomplish. Further, trade should be viewed as part of a strategic rubric, and there is a case to be made for allowing the Ministry of External Affairs to deal with international trade – given the negotiating experience of its diplomats. Another challenge is the perception that India creates hindrances in multilateral agreements, such as investment facilitation, at the World Trade Organization (WTO). This could lead to exclusion of Indian views from future proceedings. To combat this perception, India must be more proactive in its discussions. India should deepen focus on plurilaterals and make an effort to engage with the world on trade issues. It is also crucial that India seek to widen its access to other trade and free trade agreements despite capacity constraints, lest the rest of the world develop a regulatory coherence that leaves India out, resulting in further trade diversion.
Opinions differ on whether India has a distinct strategic vision on facilitating trade agreements and policies. Strategic vision requires that India direct its energies and resources into doing a few crucial things well. The Indian government must therefore create conditions – such as competitive input costs, reliable and affordable public utilities etc. – that are conducive to the development of certain crucial sectors. Without dedicated investment in areas in which it has a comparative advantage, and in areas of technology that the world will use and deal with in coming years, India cannot hope to become a market leader of the future.
Fundamental to advancing India’s trade interests are also the issues of coalition-building at global forums, establishing negotiation and debriefing mechanisms, incentivizing behavioral changes at the business-owner level, and turning areas with which India is uncomfortable into hubs of innovative flexibility. Questions also arise about what India should do in a world that is arguably becoming more protectionist. Should India begin planning for such a world by becoming inward-looking itself, and pull out of agreements such as the Regional Comprehensive Economic Partnership (RCEP)? Lastly, India’s new industrial policy must focus on improving systems, processes and logistics, and not so much on attempting to pick winners.
Ms. Tanya Rohatgi, a research intern at Brookings India, is the author of this report. The views are of the author(s).
Speakers: Pradeep S. Mehta, Secretary General of CUTS International; Harsha Vardhana Singh, Executive Director of Brookings India.
Chair: Ambassador Shivshankar Menon, Distinguished Fellow at Brookings and India’s former National Security Advisor and Foreign Secretary.
The discussion focuses on India’s multilateral diplomacy in the Asia-Pacific, particularly with respect to Regional Comprehensive Economic Partnership (RCEP) following the U.S. withdrawal from Trans-Pacific Partnership (TPP).
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[On the ongoing trade negotiations] If we’re serious about resolving the core issues that the U.S. has with China, then this is going to be a way station that’s going to require a lot more continued focus by the administration for a number of months if not years.