Recently India has reaffirmed its commitment towards WTO centric multilateral trade, but parallelly India also renewed many Preferential Trade Agreements (PTA) with vigour.
India has maintained their certain long-held positions in WTO, at the same time India recalibrating the handling of PTA negotiations.
At WTO, India opposes certain developments such as Joint Statement Initiatives and the degradation of Special and Differential Treatment (SDT) and self-declaration of development status and its proponents.
Simultaneously India is taking the lead in certain areas such as wavering TRIPs for pandemic related medical equipment and vaccines. India is trying to find a permanent solution on the stockpiling for food security and SDT for fisheries.
Outside the WTO sphere, India has begun or resumed PTA/FTA negotiations with many countries, with Israel and UAE being the latest examples. There are many reasons for these multi-fronted initiatives in international trade.
Firstly, the government focuses on export-oriented growth by setting ambitious targets for exports. It indicates the government’s offensive strategy on India’s exports instead of a defensive position protecting the industry from foreign competition.
Secondly, to get preferential access for Indian exports as an alternative for leaving RCEP because of the dominance of China in it.
Thirdly, multilateral negotiations in the WTO have stalled and plurilateral negotiations, which India is interested in, are focusing on regulations. With this WTO path blocked India has no other way but to opt for the PTA.
It remains to be seen how India will deal with such non-trade and trade linkages in PTA negotiations. But the shift is visible.
Still, there is the traditional approach in the case of linking non-trade issues with the trade multilaterally, bilaterally or in WTO.
India is also conscious about the fact that moving forward means dealing with matters that are once unrelated to trade becoming the trade concern. Such transitions are increasing especially in the case of environmental and sustainability concerns.
It may be avoided in a WTO negotiation but will surface when India would go into a negotiation talk somewhere else. Thus, these decisions can be seen as a practical decision taken by India to deal with changing trade landscape.
At the same time, India should carefully assess the implications of this new stand in the trading world. Additionally, India must be cautious about committing to new rules in WTO-plus matters while dealing with PTAs.
India’s stand on such former non-trade matters now trade matters like environment and sustainability will be valuable for the PTA negotiations.
India is committing to multilateralism, at the same time focusing on bilateralism. India also pursues export-led growth with an emphasis on self-reliance. These are contradictions but they converge too.
India is not alone in taking up this strategy as both the US and EU, are taking similar approaches towards the trade.
India’s recalibration will determine the success of India’s dream for an export centric economy.