Context:  Trans Pacific Partnership (TPP ) was signed in NZ last week.

Q. Give us a broad overview of TPP. ( names imp for prelims)

1. The Trans-Pacific Partnership (TPP) is a trade agreement among twelve Pacific Rim countries which include

4 ASEAN memebrs Malaysia, Singapore, Brunei ,Vietnam

7 RCEP members  4 ASEAN above + Australia, New Zealand, Japan

5 American countries Canada, Mexico, United States, Chile, Peru (3 from North and central America + 2 from South America)

2. They represent 40% of world economy and 26% of global trade

Q. What are the objectives of this deal?

1. Stated objective is dismantling of tariff and non tariff barriers and thus boosting trade and prosperity.

2. Unstated objective is to liberalize capital movement and make the world safe for transnational capital.

3, Even more importantly it is sought to be projected as a model for future trade deal.

Q. What are the geo strategic calculations behind this deal?

1. US wants to retain its domination of global economy and Asia pacific.

2. It’s part of US pivot to Asia or rebalancing as it was later called.

Q. What is China’s response?

1. Promoting its own trade deals like RCEP, regional comprehensive economic partnership and  FTAAP, free trade area in Asia Pacific, both of which seems to be going nowhere.

2. On strategic side One Belt One road, OBOR

Problem for Chian is that xinxiang is pivotal to overland project while south china sea and malacca strait are pivotal to marine project and china has major weaknesses at both places.

Q. What are points of concern with regard to TPP?

1. Short answer is investment ,ipr, labour and environmental standard which are much more stringent than WTO.

2. They are in effect technical barriers to trade, so called non tariff barriers.

3. IPR which are TRIPS plus will make ever greening of branded drugs possible and would lead to higher cost of medicines.

4. Data exclusivity clause will make it even more difficult for generics to come into market.

Q. You also talked about investment protection. What is this issue about investor state dispute settlement?

Under this rule private sector can prosecute states for loss of profit because of govt policies. Very limited exemptions are available on grounds of public health, environment and public order.

Similar provision is being negotiated in TTIP, Transatlantic Trade and investment Partnership and German judges have already issue declaration that this kind of arbitration is unacceptable.

Q. What should be India’s response now?

If we join TPP national treatment would help our pharma companies and ITES companies due to freedom of travel. visa issues will be sorted out.

Theoretically it is easy to say we should have been there, watering things down, build greater relationships, be part of global value chains, extend our act east policy but the fact remains that we have not been able to digest WTO. We need deep reform in so many areas. We are not at all even at stage of thinking of joining.
Reforms internally, build consensus around WTO, sign RCEP and Free trade deal with EU.