 Hello, everyone. Welcome to an international relations capsule for the Shankar Payas Academy. Today, we'll discuss some trade matters relating to the Indo-Pacific. As we have been discussing in the past, the focus is very much on Indo-Pacific for the last several months. First the Quad, then its various Avthars, different kinds and evolution, and then suddenly appeared Ocus with separated trade and trade matters from the military matters. And that discussion is still going on. We have been talking about it. And when the Deputy Secretary of State of the United States visited India just a day ago, she clarified it, but we suspected that Ocus will be the main military alliance in the region and Quad will deal with more general issues for the good of the world. I think I had said this before, but she has now confirmed it. But at the same time, there is another drama taking place with relations to free trade agreements in the region. And the one that is in the news these days is another alphabetical soup as it is known as CPTTP. I mean, people other than those who deal with these things will not even remember this. What this CPTTP is and these abbreviations, thousands of them. In fact, one of my Hindu articles I wrote about the alphabetical soup. So many of these abbreviations are floating around and it is only the professionals who will really understand what it means. So while Quad and Ocus are well known, now there is something about the CPTTP. What is this all about? This was established by President Barack Obama as part of what was considered United States pivot to Asia. You remember some earlier days there was this talk of Asian pivot, American pivot to Asia. And that was the initial stage when they started focusing on Indo-Pacific and started moving a lot of the American forces into the region. And at that time he also thought about a free trade arrangement in the region. So it must have taken a long time for the Americans to negotiate this. And they set it up all the Trans-Pacific Partnership. So that is the original free trade agreement that the Americans set up with 12 countries in the region. India was not in it. I'll come to the names a little later. And so this was projected as a major trade initiative by the United States to Asia-Pacific. And the other countries were supposed to join in not only Indo-Pacific, not only the Indian Ocean region but also from the Pacific. And so this was celebrated as a major American initiative. But for some reason President Trump did not like it at all. And one of the first things he decided was to get out of the TPP. So in January 2017 itself the United States got out of it. And this group or trade arrangement was floating for some time without any leadership. So once Trump pulled out of the TPP, the remaining members, that is out of the 12, 11 left, they called it a new name. That is the CPTPP. So TPP with a new addition that is comprehensive and progressive agreement for Trans-Pacific Partnership. So TPP disappeared and we got a new CPTPP with 11 members. Australia, Canada, Japan, Mexico, New Zealand, Singapore, Vietnam, Peru, Brunei, Chile and Malaysia, quite a mix of countries. And this is so kind of developing as a trade arrangement, trade agreement with 11 countries. And this was negotiated for about six years and the market oriented group came up without China, without India, without US. So these were basically other countries in the Indian Ocean and the Pacific region. So how this came to news now is that suddenly China has applied for a membership of the CPTPP, which has created a problem. Because originally China was not there but US was there. And now China applying for it in the context of the changes in the Indo-Pacific, the Quad and AUKUS and all that. China probably felt that they should get into a trade arrangement in the region. And they found a ready-made free trade arrangement with 11 nations and they applied for membership in September 2021, just a few days ago. Of course it's a matter for the other 11 countries to discuss and decide whether they should get China in or not. Because as you know these free trade agreements are negotiated over a period of time. There will be many specific areas of activity, many ideas, many commodities which will be without tariff among them. And so it's a very complicated agreement and it goes into details commodity wise and so on. So when a new country applies, it has to comply with all the regulations that already been set up originally by the United States. And now as a truncated or a shortened TPP as CPTPP. So this has raised a fundamental question, whether China is eligible, number one. And number two, whether the other members are willing to take China or not. And to complicate matters further, soon after that Taiwan also applied for membership. Taiwan as you know though, it is not recognized as an independent country by many countries including us. There are many arrangements, regional arrangements in which they participate. So Taiwan has eligibility to apply and they have also applied. So which means it became even more complicated. And who are the leaders of this group now? It is Japan and Australia and together with other nine countries form the CPTPP. And these countries, 11 countries have signed, all of them have not ratified it has yet. You know there is a parliamentary procedure for the free trade agreements to come into force. And so some have ratified some others have not. But anyway, just in the process of formation when this new crisis came about with the application of China and Taiwan. And you probably know of course about another arrangement. A free trade arrangement called RCEP Regional Comprehensive Economic Partnership set up in 2019. This was very much in the news because on the eve of becoming a formal group in Bangkok, our Prime Minister was even present there. But India walked out of it at the last minute. So RCEP already has China there and it has become a major organization. And there is a lot of debate taking place in India today as to whether we should go and join the RCEP. And now the China has applied for the CPTPP. The questions are also there whether India should join it. So you have a first class situation of debate, discussion, maybe objections. So people suspect that the Chinese application is a response to AUKUS and QUAR because they want to establish a position of strength in the region. And therefore it is not at all surprising. But whether China's intentions are honest is something which is big question. Because China in the context of their application said, you see, we are trying to promote cooperation in the region. While United States and others are planning to create military structures in the region. So China comes up as a benign power, not wanting to confront with anybody but to cooperate, but nobody takes these by in its face value. They believe that there must be some calculations behind China's application. And here there is a contradiction because there is a grouping called the Quad which is promoting cooperation in the region. And it's well known that they are grouping against China or at least to prevent China from getting prominence in the region. And then how do you accept the same China into another group led by Australia and Japan? So this is the question. So politically they can probably block it, but who wants to block China? So they have to appear to be reasonable and apply the yardsticks necessary for someone to join a free trade agreement like that. So does China have the credentials to talk of a market economy? And as you know, there are reports coming out of China that China is increasingly shifting from the market economy to more state oriented economy. You know the collapse of the Evergrande, the company, the biggest property development company. And it has run into billions of dollars of debt basically because the Chinese government is not giving them support. And increasingly President Xi Jinping wants to project China as an economy of the people. Somewhat going back to the Deng Xiaoping who made, it's a capitalist country virtually. So there are some indications that there are things happening. You all heard about the Jack Ma incident, the biggest private entrepreneur in China has been put in his place. He's not been seen. We don't know what's happening to his company. So similarly there are important but slow changes in the economy in China. Of course people are all looking at it because this will have a great impact in the global economy like it happened in 2008. When laymen brothers collapsed. And the government did not support it as a result or as a cascading effect. And it affected all the countries of the world, including us. It was a global economic crisis. So some people believe that this collapse of the Evergrande is China's layman moment. A similar moment which is going to grip the Chinese economy as well as the other economies linked with China. So there is the question of the credentials of China being qualified to be in a free trade agreement if their economy is centrally controlled. In the meantime, there are other applications. UK has applied. Thailand, Korea and Philippines are applying. So some of them are yet to exceed the free trade. And of course Japan and Australia is but there are others who have not yet completed their formalities. So CPTPP has now become an organization which has become significant in the context of what is happening in the Asia Pacific as well as in China itself. Japan and Australia have already indicated that they would not want to welcome China into this group for their own reasons. But some are others, some of the others are favoring like Malaysia, Singapore, etc. feel that Chinese admission would be helpful. And then China would naturally not want Taiwan to come in there, therefore there will be a conflict there. So people may say we take both of them or if we don't take either of them. So there is enough crisis situation in the CPTPP because if China is moving towards a socialist market economy as they call it socialism is coming back. And therefore that may be a reason why some countries will object. And as I mentioned Australia and Japan are already against it and Mexico and Canada also understandably not welcome in China. But then China has another option. You can have bilateral agreements with all these 11 countries. If they cannot get into the grouping as such, then they can do that. But of course you can imagine negotiating free trade agreements with 11 countries will take a long time with their laborious process and it will be easier for these countries to join in. So this is supposedly a master stroke by China to create some confusion in the situation and also make this organization appear very big. India is not in the group but when the question of China's admission came then the question of India also being talked about. RCEP we withdrew because the final settlement of the issues were not in favour of India. We thought China would be dominating the sea. And the last minute we pulled out of RCEP and many people now say that it was not a very wise thing to do because it is a very good organization. So we are neither in the RCEP nor are we in the CPTPP. And we have of course FTAs with the UK, Australia, UAE etc. But if we have to be in this group you need to abide by the regulations of the group. So the question arises whether when you have a grouping like a quad with India, Australia, Japan and the US. Can they also have economic ties with China? So this is a new test. Can India join a friterade agreement with China when we are in the quad? So and India also our own economy is undergoing changes. We have the new idea since the pandemic and the Ladakh invasion. We talk about Atmanar Bhar Bharat. So when you say you are Atmanar Bhar and you depend on self-reliance. How far will it tie up with a friterade agreement with so many countries? Will India qualify like people may challenge China? Will some countries challenge India? And say that your economic policies are not liberal enough and therefore you cannot join this group. And this has already happened to us because the APEC, the Asia Pacific Economic Cooperation. We are not a member even today. We have been trying to get membership but it was set up at a time in our relationship. The US was not so good. So US made sure that you did not become a member of APEC. We applied and then they suddenly said that there is a freeze. New members cannot be taken. And then they said there are problems with India's economic policy, taxation, blah, blah, which do not tie up with Asia Pacific. So we made great efforts. I remember I was in Washington those days and we repeatedly made approaches to the US government. That India must be admitted to APEC and they gave one excuse or the other. And since then nothing has happened because we have also not pressing for it. But in recent discussions among NGOs and think tanks in Delhi, there is repeated demand that we should try and get into APEC. We were invited to APEC by some post countries in the past, but we are not members. And that may be one, a more important and urgent question that we go into this. And some people have tried to work out whether what will it mean if India wants to join the CPTPP. And the calculation is that it will take 10 to 15 years for us to qualify in terms of the agribusiness because it will mean our changing our regulations letting to trade in various ways. So that process of changing our laws in order to make it in keeping with the provisions of the CPTPP, it will take us so long, 10 to 15 years to redesign our regulatory mechanism. Of course, people say that we go to, in any case, India needs to reform our trade policy and we have been postponing it. Whatever changes we have, we have been sort of tinkering with it, but not really doing anything very serious. And so we need radical reform and some writers are saying, good, let us now work for the CPTPP, which will help us on the long run to reform our trade policies. So if it is a 15 years and what will be the political compulsions, how will the US-China relations shape up? These are all things we do not really know. So the discussion is taking place and while you prepare for your own examination, you have to keep this in mind. And follow these negotiations, we'll start hearing about it. Whether India will join the RCEP, which is an easier effort because we have done almost everything till the last minute. And if the RCEP had given some more time for India and not insisted that it should be signed and then there in Bangkok, maybe we would have got more time and we would have joined. So we regret that and therefore maybe we may give greater urgency to join the RCEP. But again, if you want to now join, you have to have the agreements of all members. So it will be necessary for us to consider these two and we have to observe which ones we want to join. And that is also the angle of environment friendly trade agreements because now the focus is more as you know because of the climate change. There are many of these products which are not environment friendly may have to be dealt with differently. And this was not there say five years here, five years ago, 10 years ago. And there is greater emphasis on trade-related matters going into the aspect of environmental protection. And then will the US apply? Because the US had withdrawn and will Biden want to come back? So if China and US do not join, India does not join, etc. Then the CPTPP may not be as important as it could be by a wider margin of participation. And since this comes after the setting up of the Quad, the complications relating to its conflict with Quad will also come into play. So many people say that it may be better for India not to join the CPTPP but negotiate individual for free trade agreements with all these countries. Now it is 11, China joins, Taiwan joins. So as it grows increasingly then we have to sign free trade agreements with all these countries would be more beneficial than join the CPTPP itself. So this is the present picture. So I brought this up basically to bring your attention to this particular issue because this is not something which appears in the press or not many people are giving attention to that. I myself am not a trade expert. I'm watching this basically from a political perspective and you may therefore want to read up and understand the various implications. But if there is something that I can clarify in the context of what I said, we can have a discussion. Thank you very much. Because Taiwan has a persona as it's owned in the commercial and trade areas. We have a big trade and we have a trade representative in Taiwan whom the Taiwanese called Indian ambassador. My own brother was there in Taiwan. He used to call himself trade representative but all the Taiwanese called him ambassador. So it was a kind of dual thing so many because many countries have one China policy and therefore you cannot have diplomatic relations with Taiwan. But because you must have also observed that China is raising its heat against Taiwan in the recent months. Today in the Hindu there is an open article by Shyam Saran about the possibility of a Chinese invasion of Taiwan. Not invasion with a real sense but tensions going up and Xi Jinping saying that Taiwan will be integrated. Because he says in a peaceful manner we integrate. But Taiwan immediately said that we are a normal to integrate. Because they have seen what happened to Hong Kong. Hong Kong agreed to join China on the understanding that there will be two political systems and two economic systems and one political system. Or within one country two systems that was the philosophy. But as Hong Kong retained much of its independent nature, China has climbed down on them. There is a freedom movement, a problem in Hong Kong. There is a serious chance of annexing Hong Kong which is a little more legitimate than Taiwan. Taiwan is virtually an independent country but Hong Kong was part of China also after the British left. So if they also integrate them, so this is not a good example that Taiwan can follow. If they are offered the same kind of integration they may be very careful. But things are getting serious and both sides are taking very strong positions and you know the position of the United States. They have also a one China policy but they have made it very clear that they will defend Taiwan against any foreign invasion. No, this is not a matter of power because trade also gives you power. So but increasingly the world is becoming getting united on economic and trade matters. The idea is to simplify but at the same time protecting our own interests. So having multilateral or bilateral trade agreements or free trade agreements with countries is very fashionable and very popular. Of course, Mr. Biden said that he will not enter into any free trade agreements immediately. So even our own trade discussions with the United States is under suspension. But the general trend is for people to join bilateral or multilateral trade agreements. Well, these are all specific matters. I would really not know what conditions we apply when you go for direct group or we go for individual FTS. There must be various considerations, the kind of goods that we import from them, the kind of trade that we have with them. And it is all different categories. Yes, it was because of RCP there were certain things on which we had problems. And China insisted on finalizing the deals without waiting for India's submissives. That's what happened. So if they had given more time to India, we would have gone back with our suggestions but they blocked it off and their China played their role. So to reopen it, we have to again go back and try and work it out. Whether India is having FTA with China at present now, as far as I know, we felt that the kind of concessions that we were expected to give to other countries will not be in our interest. Simple as that. When you talk about trade agreements, we have to ensure that we have more benefits than sacrifices. Even about Asian treaties, we have had this occasion to say that some states said that there was a lot of money but the central government said that we would earn more and so there was a balanced question even inside the country. And that happens when it comes to trade. Well, one benefit would be that we would have modernized all our trade practices, which many experts say that would be very useful for India. And so it will help us to sync it with the CPTPP and that will enable us to modernize our trade regime. That is the judgment. Yes, obviously. But integrating Hong Kong with China has not happened as far as these matters are concerned. And they are still very autonomous and independent. And issues will come up when Hong Kong actually becomes part of the system because now there are two systems in one country. And there is resistance from the Chinese side to change the two systems into one. And if that happens, then what kind of conflict will arise we have to see. Yes, that is a concern. And then the question arises whether being inside it is better or keeping outside it is better. You know, I raised this issue in my Hindu article about our being say part of SEO or part of BRICS. And part of various all these alphabetical groups because we join at one stage but then the situation changes. And then we continue with these organizations. So what I was suggesting was that the government must look at all these groups we are members of. And unless you have some meeting points, there may not be any interest in our continuing. Like we have closed down SARC because we found that there was no meeting point. But SARC continues but they are unable to make meetings. So this kind of situation may arise in different groupings. So joining groupings, leaving, etc. will have to be done with great care and interest. Yes, it is not. But when you talk about the crises like the pandemic, the climate change, supply chains. These are all political as well as economic issues. So these all have to be dealt with in that context. But what the Americans wanted was a clear military alliance. And they found this partnership with Australia and UK. But these countries already are partners. They are already allies in other context. So there was nothing new in it but they wanted to project their power in a military manner by creating focus. So now Chinese criticism is more about focus than about part. Because part is becoming more acceptable to China. So it is too early for us to draw these judgments at this point. But we can see that such questions will arise. What are the benefits? Will Malabar exercise be part of part in the future? All these are questions to be answered. Well, if we can relate our trade regulations with those of CPGTP, we can get the benefit. This we have to work out. The benefit of retreat, which means you have to charge less tariffs. Many goods may be exempted from tariffs. These are all part of free trade arrangements. So that we like to be studied carefully. At the moment, it's a political question. Will China be allowed? Will the US apply? What will happen to Taiwan? These are all issues that I was just flagging. And in the coming days and months, we will see more developments on this. Okay, so thank you very much. We'll see you next week.