With the IPEF members
concluding the negotiations for fair and clean economy agreements, India should
follow a cautious approach while finalising the text of these pacts as new
commitments need not restrict its policy space or tax revenue generation
abilities, a report said.
Think tank Global Trade
Research Initiative (GTRI) said in its report that after the conclusion of the
negotiations, the IPEF member countries, including India will now do domestic
consultations and legal reviews and prepare final texts of the proposed
agreements.
While doing that, the
government needs to "focus on ensuring that new commitments do not overly
restrict its policy space or tax revenue generation abilities," it said.
This includes careful
considerations in areas such as clean economy commitments, labour standards,
and agricultural policies, it added.
India, the US and 12 other
members of the Indo-Pacific Economic Framework for Prosperity (IPEF) have this
week concluded the negotiations on the clean and fair economy agreements with a
view to strengthen the implementation of effective anti-corruption and tax
measures and promote sustainable trade.
It was announced after the
third IPEF ministerial meeting held in San Francisco, California, this week.
The countries have also signed an agreement on supply chain resilience.
The GTRI said that these texts
encompass diverse areas such as labour, environment, agriculture, and other
relevant sectors, necessitating expert involvement from respective ministries.
"There is not enough
scope for altering the substantially concluded texts through the domestic
consultation of legal scrutiny processes, yet India may keep few critical
issues in mind while finalising the agreements," GTRI Co-Founder Ajay
Srivastava said.
On the IPEF Clean Economy
agreement, it said that the partners are expected to decarbonise and reduce the
climate impact of the transportation sector, follow advanced sustainable
agricultural practices, and address drivers of deforestation and degradation,
including by working with companies that source products from the Indo-Pacific
region.
"While doing legal
review, India may not agree to a non-derogation clause. This would prevent a
government from relaxing an existing domestic rule for a project of national
importance," the report said.
It added that India also
should not agree to minimum standards on clean energy products/technologies for
domestic markets as this would prevent producers from selling in their domestic
markets and relying on imports.
"India should not agree
to stop preferential treatment to domestic suppliers in government procurement
of goods," it said, adding that while India is committed to
sustainability, it cannot afford to have the same stringent labour and
environmental standards as the advanced countries.
It also said that India should
not allow the import of GM seeds and foods in the pretence of food security as
doing this may result in a surge in subsidised agriculture commodity imports.
"We must settle this
issue at the domestic level first before taking international obligations.
Large seed monopolies want farmers to buy seeds from them every time if once
bought. Do not agree to restrict farmers' rights to reproduce or exchange
seeds. Do not surrender the right to limit trade or provide subsidies to
farmers for fertilisers, electricity, and irrigation," Srivastava said.
He said that India should
learn from the US, which uses heavy subsidies on agriculture and is now doing
the same for critical industrial sectors.
With regard to the agreement
on the fair economy, the report suggested that India is already implementing
many of the obligations related to anti-corruption and taking new obligations
would make domestic actions legally enforceable and open to international
scrutiny.
It said that commitments
related to the effective administration of tax policy might curtail the ability
to raise tax revenue.
"India should ensure that
the provisions do not restrict its policy space. For example, should India seek
inputs before increasing tariffs or imposing trade restrictions or affect
domestic policy changes? No, as this would legitimise big businesses to have a
direct say in how we should make our domestic laws," Srivastava said.
Further, it said that
demanding labour standards might provide legal justification to the US to
impose restrictions on India's labour-intensive exports on the ground that
India did not follow the standards.
"While doing legal
review, we should not agree to reiterate the ILO (International Labour
Organisation) conventions agreed. Commitments at ILO are the best endeavour,
but reiterating those under an IPEF becomes binding and actionable," it
added.
It added that India's decision
to stay out of the trade pillar of the framework, which focuses on digital
trade, labour, and other sectors, aligns with its broader strategy of retaining
regulatory autonomy.
IPEF was launched jointly by
the US and other partner countries of the Indo-Pacific region on May 23 last
year in Tokyo. Together, they account for 40 per cent of the world's economic
output and 28 per cent of trade.
The framework is structured
around four pillars relating to trade, supply chains, clean economy and fair
economy. India has joined all the pillars except the trade.
Australia, Brunei Darussalam,
Fiji, India, Indonesia, Japan, the Republic of Korea, Malaysia, New Zealand,
Philippines, Singapore, Thailand, the US and Vietnam are members of the bloc.
www.business-standard.com dt. 20.11.2023