 Hello and welcome to NewsClick. Today we are in conversation with Professor Biswajit Dar, who is a well-known trade expert. He's been on several official committees of the Government of India. He's currently Professor of Economics at the Centre for Economic Studies and planning at the Jawaharlal Nehru University here in New Delhi. Dr. Dar, welcome to NewsClick and thank you for your time. To begin with, the sort of root for economic integration no longer seems to be the World Trade Organization. Rather, countries are now engaging in mega-free trade agreements or what are called the mega-regionals. There were three on the block with the ascendancy of the Trump presidency. Two of them, the Trans-Pacific Partnership and the Trans-Atlantic Investment Partnership have been shelved. And the Regional Comprehensive Economic Partnership, which India is part of, along with 15 other countries, is the main trade agreement, which if concluded is likely to be the world's largest free trade area. Can you give us a sense of what is the RCEP and what are the issues covered under it? Yeah, RCEP is basically agglomeration of countries with whom ASEAN has had a free trade agreement. So, it is also called ASEAN plus one FTA. And the lead for RCEP was taken by the ASEAN. And it is very interesting that ASEAN took this initiative when it itself was trying to form an economic union, customs union, they call it the ASEAN economic community. So, one major issue around RCEP is the ASEAN centrality. So, it is driven by the ASEAN. And of course, in the course of the negotiations, other countries have pitched in various ways, but the momentum actually comes from the ASEAN countries. The other interesting dimension of RCEP is that of the 16 countries involved, seven countries were already part of the Transpacific Partnership. And the Transpacific Partnership, as we all know, had an agenda for taking the trade integration or what we could call the level of openness to a very different level. We were actually talking about virtually zero tariffs. And all the rules were formed in such a way that it would help the global value chains. In other words, the multinationals who are sort of leading these or driving these value chains, where the focus of attention in TPP. So, all the rules were formulated around the concerns or the interests of the multinationals. So, when these seven countries were a part of these TPP, and so they in a way brought some of the TPP agenda on to RCEP. We have been seen this kind of discussion on a regime which is talking about virtually zero tariffs across the board. We'll come to the point that you raised about tariff reductions and the sensitivities vis-à-vis that. But just before that, I want you to give us a sense of the fact that India is already implementing several FDA, some of them with RCEP countries. We don't have an FDA with China, for instance. So, what's been India's record on the trade front so far? And is that informing the negotiating positions? Yeah. You see, we have three FTAs with the RCEP countries. One is, of course, with the 10 member ASEAN, then with Japan and Korea. And two other FTAs are in the works with Australia and New Zealand. Now, if you look at these, the three FTAs which are already being implemented and this is from around 2010-11. So, we have at least six, seven years of data to look at what has actually happened. You find that the record has been very dismal. There is only one headline there, very dismal in terms of our export penetration into these markets. If you look at the other side, if you look at the imports, then the imports have steadily increased. So, the trade imbalance in some countries with some partners is so large that the trade imbalance is several times the India's exports. Like you mentioned that RCEP is very important because we have this big elephant waiting to take over the room completely. They are already there in the room in a big way. That is China. And if I look at China's penetration into India and also compare it with the other side, India's penetration into China, it just tells you a story there. In 2004-5, India's exports to China was in the range of about 5.5 billion dollars. And the trade deficit with China was about 1.5 billion dollars. And if you look at 2016, the latest numbers that are available, the trade deficit has gone up to more than 51 billion dollars. And India's exports have gone from 5 billion dollars in 2004-5 to just about 10 billion dollars. So, you can just see what's actually happened. China's exports to India have increased by more than nine times. And India's exports to China have increased not even by a factor of two. So, it's not a question of being pessimistic about imports. But certainly for a country like India, we need to be worried about our trade deficit and the current account deficit. But if you look at the media reports, it looks like the government is apprised of this. Because India seems to be holding out in terms of massive reductions of tariffs in manufacturing and in agriculture. It had proposed a three-tiered formula. But it recognizes that there are sort of losses because we have the highest tariffs. So, what are some of the sort of sectors that you see are of concern in terms of jobs, especially in agriculture and in manufacturing? I think we need to be, you're right, the government is now worried. Because when we made our initial offers of tariff cuts about two years back, we had conveyed very clearly that we are not going to give China the kind of market access they were looking for in terms of referential tariffs. So, while we offered tariff elimination, ASEAN, the extent of 80-85% for China, it was about 42-43%. But that didn't fail. Now, what does it mean like you're asking in real terms? One is of course that small and medium enterprises, many of the Indian manufacturing units have already faced this kind of a problem. And with China just coming in and sort of rolling over, I see that the future of all this, make in India kind of a thing is going to be seriously in trouble. I do not see how the government can do this kind of make in India, turn around the manufacturing sector with this kind of open door policy. There has to be certain extent of tariff protection, some way of supporting the industry. Otherwise, they'll just get completely knocked over. And let us also recognize the fact that the big jobs that the government is actually was expecting right from day one, when it came into power, those jobs will only take place, will come from the SME sector. They can't come from the big companies. The big companies are actually shedding jobs. So I'm really concerned about that. Then there's the big issue of agriculture. We are now negotiating with two countries, especially Australia and New Zealand, which are big agricultural exporters. So both in terms of the grains and the dairy products, they will be under pressure. And we know for a fact that our levels of efficiency is not great. So unless something is done immediately, and I don't know how it can be done, we will not be able to compete. But the response the government would have to your criticism would be that trade negotiations are about give and take. And we have massive offensive interests and much to gain in the services sector in terms of the IT sector. India's commerce minister has said that we want more, what is called mode for access for temporary movement of software professionals. But this is also coming in the context of media reports in the last few days of massive job cuts in the IT sector. So this whole services gain, how would you evaluate that position? Now in the services sector, if you look at all the big services areas, India is on the back foot. So look at financial services, look at education services, look at telecommunication. At one point, there was a lot of glib talk about health services and education services, where India would be a net exporter of services. But the point is that when these two sectors, we do not have professionals who adequate number of professionals to serve our own people. How can you actually think of exporting services in these two areas? So I think if it happens, it will be very unfortunate because then you are leaving your own countrymen to suffer. Now on IT, the scenarios bleak and what you are looking at job cuts by these major companies. And this is just the beginning. This is just the tip of the iceberg. It is going to be quite significant moving on. And the reason is automation. The kind of robotization that we are seeing today. And this is something that the media has not reported very well, that India is among the top countries using robots. Recently, three, four days back, I was a report in one of the newspapers on the robotization in the Suzuki factory. So you are actually looking at that kind of robotization that is happening, so which means that there will be massive job cuts. So moving forward, you know, mode four was, mode four I would say was never an option. And after 9-11, I think it has, it seems to be an option in realistic terms. No country will allow the kind of migration that India is talking about. It is just not possible. Dr. Dark to conclude, one of the key concerns for civil society groups monitoring the negotiations has been the sort of lack of transparency and the secrecy. There are no texts available. For instance, the Kerala government has sort of put out a public statement saying that they want to be part of the consultations. Also, because of the impacts, they have seen because of the India Sri Lanka and the ASEAN India agreement. And given that you are increasingly seeing intrusions into federal policy spaces, do you see the need for an overhaul of India's trade policy sort of making mechanisms itself? No, certainly. I think it needs a complete overhaul right from the beginning of this phase of, you know, serious engagement with FTAs in India. And we have been actually trying to make the point that there has to be serious consultation with all the stakeholders. And the stakeholders should actually drive the agenda, like it happens in most of the mature economies. Now, this government has been talking about cooperative federalism. Now, cooperative federalism, we haven't seen much of this. We haven't seen that we have got much evidence in the last most three years. But I think there is an opportunity for this government to show that it believes in cooperative federalism by engaging with all the state governments and then to work out a position based on the concerns that the state governments have. At the same time, I think it is very important for the government to listen to the civil society. Because in many of these areas, like for instance, agriculture, we don't have these farmer's organizations like we have in the West. You know, the civil society, which carries the message from, you know, the ground ground below from the fields and raises concerns. So it is very important for the government to understand about agriculture and that it can only do by talking to the civil society organization. There is no other way I can look at, you know, this thing being addressed. The warship countries are looking at early 2018 as the, you know, sort of some kind of a sort of the for clinching the deal. And unless India does take a position right away, I think is going to be a kind of a disastrous venture. So I hope, you know, we can all sort of make the government see sense and to take a more realistic position and a more proactive position to make our voice heard. Thank you very much, Dr. Dar. And as you know, India will host the 19th trade negotiations round in the city of Hyderabad in July. And as the sort of negotiations speed up, then we hope to come back to you for more analysis. Thank you very much. My pleasure. Thanks.