Bilateral Trade Agreements – Issues and Concerns for ... - Equations

Bilateral Trade Agreements: Issues and Concerns for India 27
3.1 Fools rush in where angels fear to tread
Tread warily on the Indo-Singapore Comprehensive Economic Cooperation
Agreement (Ceca)
The Financial Express, Bangalore, Saturday, November 13, 2004
TK Bhaumik
THE idea of an Indo-
Singapore Comprehensive
Economic Cooperation
Agreement (Ceca) was
r e c e i v e d w i t h g r e a t
excitement when it was first
mooted jointly by the heads
of the two governments. The
joint cask forces (JTF), setup
to study the scope and lay the
broad structure, had also
acted with determination and
speed. The report of the task
force was produced within
the prescribed deadline. Since
then, however, the spur
seems to have been lost
somewhere during the
negotiation process.
The deadlines for
conclusion of negotiations
have been missed several
times and negotiations are
continuing. I am not
particularly worried about
missed deadlines. On the
contrary, neither the
Singapore side, nor the Indian
side, should rush to conclude
the negotiations. The
negotiations should result in
a kind of agreement that is
beneficial to both and
something that serves the
mutual interests. To achieve
this objective, prolonged
negotiations should not be
viewed as a sign of
difficulties.
M o s t f r e e t r a d e
a g r e e m e n t s ( F T A )
negotiations take time and
are not concluded in a rush.
The North American Free
Trade Agreement (Nafta)
negotiations, for instance,
took about seven years. Good
agreements are usually wellnegotiated
agreements that
take care of all the concerns.
What is of concern to me is,
however, visible signs of
negotiating fatigue, and some
kind of frustration, about the
Ceca.
The hitch has been
presumably around the rules
of origin criteria in particular,
b u t t h e r e a r e m o r e
fundamental issues involved
in the current deadlock on
negotiations that need to be
understood.
First, the idea of Ceca
was imposed from the top.
It is not an idea whose need
was felt at the bottom
layers of the stakeholders.
For the latter, it was given
to accept and assimilate.
Second, the joint task force
also was left with little time
for a wider consultation
with the cross-section of
stakeholders.
The JTF was more
concerned about the deadline
than consultations. When the
negotiations began, the
I n d i a n s i d e o f t h e
stakeholders were asking
“Why Singapore”
The idea of Ceca was
the first ever bold initiative,
after the announcement of
lndia’ s Look East policy in
1992, and a political signal
to India’s commitment to
pander to the expectations of
the Asean leaders. Earlier,
India had committed itself to
bring its tariffs down to
Asean level. The choice of
Singapore as a Ceca
partner was a matter of
official recognition of the
role played by Singapore in
the recognition that we had
received from the Asean in
the post-Cold War period.
The idea of lndo-Singapore
Ceca is, in this context, a
political, though not
politically motivated,
decision. There were, of
course, genuine strategic
angles as well in the choice
of Singapore as a Ceca
partner.
In retrospect, two things
can be said about the Ceca.
First, it is an FTA-plus
agreement, meaning thereby
that the two economies had
decided to engage themselves
in total economic integration
and much beyond what was
possible in a normal free
trade agreement. The idea
was to extend the integration
process to almost all aspects
of bilateral economic
relationship.
This brings us to the
second aspect of Ceca i.e. Its
WTO-plus character. It again
means two things. One, it
talks of areas such as
investment, competition
policy, environment, etc that
are not currently under the
WTO. Two, in those areas
where there are WTO
agreements, it talks of
e x t e n s i v e f o r m s o f
cooperation agreements e.g.
WTO-plus agreement on
Trips. From this angle, Ceca
is highly ambitious and
broad-based in scope;
something for which the
Indian stakeholders are
probably not ready. They
are not quite clear as to how
Ceca is going to benefit them.
So far as the FTA
component of Ceca is
concerned, the feeling here
is that if free trade has to take
place, a higher value addition
norm has to be in place to
keep the possible flooding of
goods from third countries
under check. This has given