India has to move quickly on free trade agreements

India has both an opportunity and a problem in the wake of the crisis that surfaced at the World Trade Organization’s (WTO) 13th Ministerial Conference (MC13) and may eventually cause the intergovernmental organization to vanish. It challenges the next administration to undertake the largest administrative transformation in many decades when it is constituted after the Lok Sabha elections.

The moment has arrived to combine the departments of commerce and external affairs into one organization. India would be in a better position to meet the challenge of becoming the world’s third-largest economy the sooner it is completed.

Tradition-bound foreign ministries have been rechristened to take advantage of a fast changing world and reap a fresh crop of possibilities from globalization, all over the globe—from Australasia to America, in parts of Europe and Asia. Thus, in 1987, the Department of Trade and the Department of External Affairs in Australia were combined, and a year later, New Zealand followed suit.

In 1993, the Department of Foreign Affairs in Canada was renamed as the Department of Foreign Affairs and International Trade. These kinds of cases are numerous and continue to increase. India shouldn’t just change its name because other nations have done so.

Objectives and conditions have more significance. It is necessary to reexamine India’s goals abroad in light of the MC13 in Abu Dhabi, which not only failed to address the most pressing trade concerns of the day but also managed to hide its stunning impasse in diplomaticese. These days, they include commercial and trade relations just as much as traditional diplomacy.

It’s possible that the formidable and capricious Republican Donald Trump will be the next tenant of the White House in Washington in less than 11 months. From 2017 to 2021, while he was US President, Trump pulled out of several organizations and pledges that the US had promised to fund and respect.

The United Nations Human Rights Council, UNESCO (United Educational, Scientific, and Cultural Organization), the Iran Nuclear Deal, the Trans-Pacific Partnership Trade Agreement, the Paris Climate Agreement, and the list goes on. The WTO will be one of Trump’s worst enemies if he wins the US presidency again the following year. His assumed government may decide to withdraw from the organization, which is made up of 166 nations in total. Trump will render the WTO ineffective by putting “America First,” even in the unlikely event that the US, led by Republicans, decides not to leave the organization.

His “my way or the highway” mentality will have to be accepted by the rest of the globe, which will hasten the WTO’s decline and force it to adopt new trade policies. With its ambitious goals and substantial ties to Washington in both economics and technology, where does that leave an ambitious India? How prepared is India for a future without the future Trade Organization (WTO) or the General Agreement on Tariffs and Trade (GATT)? Since Independence, New Delhi has become used to both, one after the other, for better or worse.

The MC13 said that China is getting ready to overtake India and other economies that are comparable to India’s in terms of international trade policy. These economies, including Brazil and South Africa, now fall between the affluent, developed nations and the poor, developing ones.

Until recently, India and China collaborated in the WTO despite bilateral disagreements in other domains due to shared interests and concerns. The alliance that was formed during the 2003 WTO Ministerial Conference (MC5) in Cancun, Mexico, between then-Commerce Minister Arun Jaitley and his Chinese counterpart Lu Fuyuan, turned the conference into a significant event in the history of international trade talks. Since the primary concern at Cancun was export subsidies, the MC5 was crucial for both China and India. Twenty years ago, the WTO was not as powerless as it is now.

At the time, Jaitley was the WTO’s intellectual leader for the Group of 21 (G21) developing countries, and the Chinese minister implicitly took on the role of spokesman for the G21. When ministers from wealthy Group of Seven (G7) countries came to Jaitley with ideas to save the MC5 from impending collapse, he held Beijing accountable for the G21’s tardiness. He did, however, offer to convince Lu to make a concession. China and India were working closely behind the scenes, but the G7 was not aware of this. As a result, Jaitley was able to extract in Cancun historically large concessions on export subsidies while serving as a negotiator between the wealthy countries and the G21.

The demise of this kind of India-China collaboration was seen during the Abu Dhabi Ministerial. Beijing acknowledges that the WTO’s time is running out and that it is now on life support. It has already begun to move away from the multilateral trade policy track and toward the plurilateral one.

India has to act immediately to follow suit. The purpose of China’s “Investment Facilitation for Development” agreement proposed at the MC13 was to gain the Belt and Road Initiative via underhand means. India has to take notice that this plan received backing from at least 100 nations in Abu Dhabi. Due to the WTO’s need for unanimity on regulations, it was not approved. India was against the Chinese suggestion.

With its many free trade agreements (FTAs), which are now being negotiated, New Delhi has to move quickly. The Comprehensive Economic Partnership Agreement (CEPA), which was completed with the United Arab Emirates in record time in 2022, is a valuable example. Even though the Commerce Ministry was in charge of this CEPA, it could not have been carried out if South Block, the location of the Prime Minister’s Office and the MEA, had not been prepared beforehand.

The positive working relationship between these two institutions and their counterparts in the UAE contributed to the outcome of the discussions. In free trade agreements with the United Kingdom, the European Union, or the Gulf Cooperation Council, there is no such concession-taking.

This emphasizes how crucial it is to combine India’s advantages in traditional diplomacy and trade policy discussions. By uniting the Commerce Ministry and the MEA, they will put a stop to their turf battles and forward the goal of centering South Block’s actions around economic diplomacy.