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TPP and India: Lasting lessons


The conclusion of the TPP (Trans Pacific Partnership) negotiations in Atlanta earlier this week brought down curtains on the most intense regional trade negotiations in modern history. Having gone on for more than five years—the first round of negotiations were held in Melbourne in March 2010—and almost two full terms of the Obama presidency, the TPP talks survived anxieties, scepticism and doubts to eventually reach consensus.

There is still some ground to cover. The deal needs to be sanctioned by individual country legislatures. Some TPP members like the US, Australia, Canada, and Japan might find selling it to domestic constituencies a tough task. An ambitious and controversial deal like the TPP can hardly please all. Different constituencies will be happy, or unhappy, depending on what the TPP fetches, or snatches. Lobbies in legislatures will be accordingly aligned for or against. Much will depend on how the heads of states of TPP member nations ‘package’ the deal to their legislatures. If they are able to highlight pieces that can appeal to constituencies opposed to the deal, some of the opposition will be moderated. Having come this far though, it would be very surprising if the deal isn’t passed by individual country legislatures as the leaders would have already had consultations with domestic stakeholders.

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Till the text of the TPP is available in the public domain, it is not possible to figure out how far it has gone in becoming a 21st century ‘gold standard’ trade deal by providing comprehensive market-access removing trade and non-trade barriers. Given the stark difference among negotiating parties on various issues—intellectual property, government procurement, rules of origin, investor-state disputes and even tariffs—compromises were inevitable. To that extent, some aspects of the agreement should be ‘watered down’ editions of original aspirations. Nonetheless, the TPP marks a significant advance in modern trade given the far-reaching impact it would have on trade governance.

The TPP’s economic and strategic implications would extend to India notwithstanding its distance from the TPP. There are implications for Indian exports to TPP members from the greater preferential access they will now have to compete with vis-à-vis exports from one TPP member to another. There are also long-term challenges of adapting to stronger quality standards implemented by TPP members that might become generic across these markets. These apart, the TPP, or more precisely the story of its conclusion despite numerous odds and hiccups has important policy lessons for India.

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A major take-away from the conclusion of the TPP deal is the importance of being persistent in trade diplomacy. Time and again, there have been occasions during the TPP negotiations, when contrasting postures have nearly torn negotiations apart. Negotiating rooms have been fraught with tension over multiple offers tabled at periodic intervals. Since the Uruguay round of the GATT talks, no other trade deal has aroused as much attention of the stakeholders as the TPP. Both business lobbies and civil society organisations have meticulously probed leaked documents of the TPP talks for preparing submissions to negotiators. Indeed, since the TPP began accepting public submissions and engaging in stakeholder consultations, it became a far more dense, exhaustive and complicated exercise. Despite such intensity, pressure and tension, negotiators stuck to their guns to bring the deal to a close. This points to the importance of not abandoning trade diplomacy, particularly after investing precious time and resources. India’s decision to call off the FTA negotiations with EU were rather hasty and immature in this regard given the distance the talks had covered and the expectations that major garment exporters like those from the Tirupur apparel clusters have from the FTA. The fact that the TPP went on and eventually concluded on a consensus shows the importance of sticking on and quid pro quo in trade diplomacy. The latter is all about exchanging market-accesses with negotiators required to trade-off multiple interests for achieving maximum gains—a point that current Indian trade diplomacy appears to be overlooking.

The TPP also drives home the importance of building a common foundation for foreign and trade policies. In a globalised world, the two can hardly remain disconnected. Mega-RTAs like the TPP represent strategic partnerships between countries across a wide range of issues over which many of the parties might disagree, but nonetheless agree to find working solutions for regional and national benefits. Strategic partnerships cut across foreign and trade policy objectives and should be approached together. This is the reason why many countries in the Asia-Pacific—Australia, Canada, and New Zealand—have merged foreign and trade policies into the composite DFATs (Department for Foreign Affairs and Trade). Better exchange and coordination between foreign and trade offices and diplomats can produce clearer negotiating perceptions.

A live and kicking TPP in the Asia-Pacific has to be factored into India’s strategic ambition of membership of APEC. India’s foreign policy has been robust in this regard and has succeeded in creating strategic goodwill for India’s entry in APEC. But will India’s trade policy be able to match up to the goodwill, particularly if some of the TPP’s standards become benchmarks of external liberalisation commitments for the region as more countries express interest in docking on to the TPP? TPP might have brought on for India its biggest challenge for convergence in foreign and trade policies.

(The author is senior research fellow, Institute of South Asian Studies, National University of Singapore)

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