India Doesn’t Get Global Trade

India is heading to be declared a “priority foreign country” by the United States Trade Representative over its intellectual property rights. It is not helping things by refusing to meet US officials to discuss the issue. Such a designation eventually leads to trade sanctions. The Indian commerce department has declared it will take the US to the World Trade Organisation.

What is wrong with all this?

The Indian commerce department is remarkably clueless about the larger trends in the international trading system. The WTO is dying and it increasingly doesn’t matter in the world system. When the short list for the WTO director general was finalized last year it was notable no one from the four largest trading nations was on it. An emerging economy victory? No, it was because none of these countries cared. China has already understood this. India’s commerce department has not.

The US drive to create a Trans Pacific Partnership that unites the US, Japan and much of Southeast Asia and the Transatlantic Trade and Investment Partnership that would unite the US and the European Union will set the gold standard in international trade — and render the WTO useless. True, these two are still far from being complete. But the TPP is actually doing quite well and could be done in two years or so. The TTIP is much more difficult, but it will still change the goalposts for global trade.

These agreements will include exactly the sort of IPR rules that India is yelling about right now. And will go far beyond them. But if the countries that represent two-thirds of world trade accept them, India will have little choice but to accede to them or simply be cut out of the international trading system, bit by bit. If China joins the TPP, as it has begun making noises it may do, then the last major trading nation would have joined. India is an almost insignificant global trade player so its views hardly matter.

The USTR sees India as a country that has helped undermine the WTO by silly demands at places like Bali on food security and is an economic basket case, in any case, when it comes to trade. It would be more than happy to inflict sanctions on India — if nothing else, it would help make clear to other countries that the TPP and TTIP standards are what will matter. India can bleat all it wants about the WTO. It is, first, questionable if India is actually compliant when it comes to its compulsory licensing action. More important and, second, the US will probably ignore the WTO ruling because it doesn’t really care about the organisation and cares even less about India.

India would be better off engaging with the US, even it is only a stalling exercise.

What New Delhi really should be doing, which the commerce department is not, is to be joining the TPP negotiations and then using internal negotiations on future standards to ensure its interests are preserved. Be part of the origins, not the victim of the end process.

Copyright © 2014 the Hindustan Times.

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