India's new burst of economic diplomacy in East Asia

India has in recent weeks surprised some key East Asian countries by its display of proactive economic diplomacy. Behind the scenes, East Asian officials see this burst of new activism as a prelude to the “informal ministerial meeting” that India will host early in September to “re-energise the Doha process” of global trade talks.

The New Delhi meeting will feature a new “rainbow coalition of the developing and developed countries,” according to Union Commerce and Industry Minister Anand Sharma. A relevant factor at work is Official India’s current zeal for trade liberalisation, largely of the conventional kind. Mr. Sharma believes that the coalition is adequately representative of the diverse membership of the World Trade Organisation (WTO) and can therefore try and push the Doha process, now in “a pause,” back on course.

The coalition has been pieced together through informal consultations among the weighty and/or vocal players on the global trade scene. And, India offered to host a meeting, cutting across the development divide, only when the idea of such a conclave gained currency among the traditionally active WTO players. Several East Asian countries are among those being invited by India. Besides the economic powerhouses of China, Japan, and South Korea, the others from the region include Australia, Indonesia, Malaysia, and Thailand.

As Mr. Sharma indicated in a recent telephonic conversation, the New Delhi meeting will discuss, at the political level, the ideas that the negotiating officials had already generated before the Doha Round went into “a pause” last year. Considerable thought had gone into those ideas relating to both the farm sector and the non-agricultural market access.

Outwardly, India’s latest intervention, aimed at cracking the Doha Round impasse, is the result of some basic political arithmetic, as it were. However, a relevant view in East Asia is that Prime Minister Manmohan Singh has, after retaining power recently, signalled his political will to push India towards the global mainstream of largely conventional trade liberalisation. Such a view is the result of the sprinter-like speed at which India has signed two major trade pacts in the week gone by. Not only that. Across geographic East Asia, India has in recent times come to be compared and contrasted with China. They are seen as two rising economic powers, with much political potential, albeit at different levels of growth as of now.

Unsurprisingly therefore, a logical question is whether New Delhi is now trying to help the Doha Round protagonists press the re-set button for global trade talks. As an aside, resonant still, as an evocative phrase with policy overtones, is U.S. President Barack Obama’s initial move to press the re-set button for his country’s ties with Russia.

In the global trade domain, Mr. Sharma does not, of course, join issue with the WTO Director-General, Pascal Lamy. Slated to attend the prospective Doha-Round-related talks in New Delhi, Mr. Lamy has already voiced his preference for “maxi negotiations” among all the stakeholders. Implicit in this remark is an assessment that a proliferation of ministerial meetings, by itself, will not suffice for a successful conclusion of the Doha Round. And, the planned meeting in New Delhi does increase the number of conclaves involving one group of select countries or another, instead of all the WTO stakeholders. Moreover, the outlines of a successful Doha-Round outcome are nowhere on the global horizon now. Easier to advocate than accomplish, in such a complicated milieu, is a formula that might reflect a greater degree of constructive creativity than conventional wisdom on global trade.

India’s newly-emerging economic profile in East Asia will be judged not only by the WTO issues but also the sustainability of Dr. Singh’s trade-pact diplomacy. Being still left out of the Asia-Pacific Economic Cooperation (APEC) forum, India was not present at the conclave of trade ministers of this inter-continental group in Singapore in July. On August 13, however, India made its presence on the regional scene felt in a big way. Mr. Sharma signed a trade pact with nine of his counterparts from the 10-member Association of South East Asian Nations (ASEAN). There was no mystery, though, about a missing signature. Vietnam, an ASEAN member which joined the WTO in 2007, reserved the right to sign the India document later. It is understood on both sides that Vietnam will do so after its “market economy status” is formally recognised by India at a prospective ceremony in Hanoi. For India, its Trade in Goods Agreement with the ASEAN, called a free trade accord (FTA) in common parlance, was preceded by another major economic pact. India and the Republic of Korea, better known as South Korea, signed a Comprehensive Economic Partnership Agreement (CEPA) in Seoul early in August. By definition and in practice, a CEPA is an FTA-plus arrangement covering also the two-way flow of services and investments. The one with South Korea is no exception. And, Seoul is pleased that it has gained privileged access to the Indian market before either Tokyo or Beijing could do so. Also, South Korea maintains that it has fully safeguarded the interests of its assertive farming community.

Significantly, the interests of India’s plantation sector have been particularly highlighted in diverse domestic comments against New Delhi’s FTA with the ASEAN. And, Communist Party of India (Marxist) General Secretary Prakash Karat is reported to have called for a constitutional amendment to provide for the mandatory ratification of all such international agreements by Parliament. A relevant question is whether the Group of Ministers, now tasked by Dr. Singh to address the concerns in India over its FTA with the ASEAN, would address this larger political debate as well.

Another important aspect of India’s current moves is its China-related competitive pragmatism in economic diplomacy. This was evident during a meeting of the trade ministers of the East Asia Summit (EAS) forum in Bangkok on August 15. China was represented by Commerce Minister Chen Deming and India by Ambassador Latha Reddy.

Reflected at the meeting was India’s political-level decision to join China and the other EAS countries to “reject all forms of protectionism in trade and investment” across national frontiers. A relevant poser, with political resonance in East Asia, is whether India can at this stage match China in facing the economic consequences of a full-scope rejection of protectionism. However, the counter-poser is whether a “rising India” can stay clear of the debate on the global good.

Already, experts in East Asia have come up with the idea of “a new Asian drama,” featuring China and India as “rising powers.” The expectation is that these two countries may now be able to contribute to the “wealth of nations,” as different from “the poverty of nations” that Gunnar Myrdal had studied over 40 years ago in his work, “Asian drama.”

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Printable version | Aug 3, 2020 4:39:49 PM |

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