Oct 10, 2015

How TPP affects India's exports - or doesn't

Trans-Pacific Partnership (TPP) was finalised recently between the 12 pacific rim countries. 

Donald Trump hates it and calls the deal terrible. Paul Krugman doesn't like it very much and calls himself a 'lukewarm opponent' of the deal. These two exist at either ends on the scale of knowledge of international economics. And both oppose the deal. Hillary Clinton falls somewhere in between, she opposes too. Everyone, except Obama and the trade ministers who agreed for the deal seem to be opposing. Even the so called industrial lobbies, pharma, tobacco and such, who hoped to get a secret sweet deal for themselves, are opposing. I am yet to see a trade-deal that was opposed by so many and is still going ahead. Funnily enough, I see that some in India are rueing that they are left out. Probably that explains as to why Indian trade minister insists that "we are not left out". One wonders how. 

TPP is not another ordinary deal. It tries to push the envelop on regulatory coherence, pushes boundaries of intellectual property regime and secretly aims to hand over the monopoly to industrial giants in fields such as pharma, tobacco, auto and other sectors. While couched in regular terms of economic development, free trade and such, it is a strong push by industrial lobbies to get their way in a globalised world. The lobbies have the heaviest footprint on the deal, probably stronger than any individual country, including US. US Congress had reservations about the secrecy surrounding negotiations and the clauses that made the deal to be kept secret even after ratification for few years. 

Prima-facie, despite all misgivings, I feel the recently concluded deal is not as monstrous as some make it out to be. The details are yet to be revealed fully, but the draconian IP and regulatory requirements do not seem to be as bad as one earlier thought. Probably that explains why industries are protesting. 

For a country like India, we are not yet at the level to engage into agreements like TPP. Our bureaucrats are at the infancy of understanding of complex trade deals in economic terms. We are still a tariff heavy developing nation. Our institutions on IP and regulatory matters are still developing. Our red tape beats any non-tariff barrier one might imagine. And our farmers, though supported, are not subsidised to the level of US or some European countries. Our Pharma sector is doing well, and we have our own way of working on Pharma IP requirements; which by the way, has helped many LDCs. At this stage, for India to even consider joining a deal like TPP is not wise. 

In coming days, the deal needs to be ratified in country after country, and as the details spill out, it might hold lessons for many of us who are observing from the side. Till then, it would be meaningless to predict whether TPP affects India's exports or not