Occasional PapersPublished on Jan 20, 2016 PDF Download
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The Trans-Pacific Partnership: Implications for India

Negotiations on crucial issues at the World Trade Organization (WTO) have been slow and tedious, and can hardly keep up with the ebbs and flows of international trade and investment. Stepping up, therefore, are the mega Free Trade Agreements (FTAs) that have begun to negotiate and set rules towards creating a 21st-century template for global trade. One such recently
concluded mega FTA is the Trans-Pacific Partnership (TPP), which is set to re-write the principles of global trade and investment. India, an emerging country with high aspirations, anticipates significant ripples from the agreement. For an emerging country like India, its decision to stay out of the TPP, regardless of its fairness and manner of implementation, is a
geoeconomic goal it has set for itself. India must now steel itself to tackle the various tariff, non-tariff and market access issues that are likely to arise out of TPP and protect the country’s trade ambitions, particularly its exports which have been consistently contracting in the last many years.

Once implemented in full force, the TPP is projected to change the global trade architecture and result in such high standards in markets covering one-third of world trade and two-fifths of world GDP. India, being a non-TPP trading partner, will find it dificult to access these markets unless its domestic capacity and standards improve. Thus the implications of the TPP for India, and other emerging economies which are not part of this mega FTA, would be the imperative to develop a strategy to deal with the expected adverse impacts while preparing it to join the TPP in the long term.

To begin with, the TPP varies from existing multilateral trade agreements as it covers areas such as competition policy, regulatory symmetry, and standards for labour and employment. It also tackles other major features such as trade in services, technical barriers to trade, and intellectual property rights. As TPP includes other developing countries, it is expected that the trade disciplines and standards will be implemented in these countries other than non-TPP members, affecting India’s trade once TPP gets implemented. The potential impact of TPP on India will be on three fronts, namely:(a) trade diversion; (b) drop in FDI; and (c) geopolitical exclusion.

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