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Trade: India ready to coordinate efforts to overcome global financial slowdown

	June 22, 2009

In a statement issued before his departure for Russia to attend two multilateral summits – the Brazil-Russia-India-China (BRIC) summit and the Shanghai Cooperation Organization (SCO) summit – Dr. Singh said: “BRIC countries also have a role to play in promoting the principle of multilateralism in international affairs, and in the reform of institutions of global governance, including the United Nations, to reflect contemporary realities. From these points of view, the convening of the first stand-alone summit of BRIC countries is a significant development.”



In his opening remarks at the plenary session of the SCO summit on Tuesday last, the Prime Minister said that India and the region that the Shanghai Cooperation Organisation (SCO) represents have many complementary features and have a lot to gain and learn from each other. Dr Singh said, "The growth of the Indian economy at an average rate of eight per cent over the last five years has opened up opportunities to intensify our interaction with the outside world."



He said that India "seeks an external environment that is conducive to meeting the aspirations of the people. The SCO and India can mutually reinforce each other’s efforts towards economic emancipation of our region." Besides Russia and China, the SCO includes Kazakhstan, Uzbekistan, Tajikistan and Kyrgyzstan.



The summit meeting, as the Russian President, Dmitry Medvedev, said in his opening speech, is being held not only to consider ways to overcome the financial crisis, but to also consider building the basis for future cooperation.



The Chinese President, Hu Jintao, followed up Medvedev’s remarks by offering Central Asian states $10 billion of credit support to help counter the global economic slump.



He said India has not remained unaffected by the global economic crisis but has "borne" it well. He felt there was a need for reforming the present systems of global governance and international financial system.



He hoped the BRIC would not remain a "talk-shop" and the member countries would work together so that their voice is heard in the global arena. Talking about the BRIC Summit, he said the leaders discussed the need to intensify cooperation among the four nations and international economic downturn and how to prepare for the forthcoming G-8 and G-20 Summits.



India may opt out of trade talks with IOR countries



India may decide to opt out of negotiations for a preferential trade agreement (PTA) with the Indian Ocean Rim countries.



The Department of Commerce has told the Ministry of External Affairs (MEA) that it is not in favour of India joining PTA discussion with the Indian Ocean Rim-Association for Regional Cooperation (IOR-ARC) countries as India is already in trade negotiations with many of the IOR countries in other groupings. The Indian Ocean Rim countries include Australia, Bangladesh, Indonesia, Singapore, Malaysia, South Africa, Sri Lanka, Thailand, the United Arab Emirates and Yemen among others



The commerce department has pointed out that India is already in various stages of trade negotiations with a number of regional groupings and that this particular PTA would lead to a duplication, sources said. For example India is already negotiating a free trade agreement (FTA) with the Gulf Cooperation Council, which is set for a revival after a long hiatus. The Asean-India FTA is ready and is likely to be signed in August this year. Another FTA in the BIMSTEC grouping, comprising eight countries, is also in the final stages of negotiations. India is already part of the South Asian Free Trade Agreement.



However it is understood that MEA is keen to have a strong trade element in the IOC grouping, which is seen as being politically important for India. The Indian Ocean Rim grouping, as the name suggests, include coastal countries that border the Indian Ocean, and the engagement with the grouping is seen to be strategically important for India. The trade agreement, which has been in the works for some time, is likely to be discussed during the IOR-ARC ministerial meeting which is taking place in Yemen over the weekend. India will be represented by Minister of State for External Affairs Shashi Tharoor.



The ministerial meeting will look into greater cooperation among the member states on piracy and sea navigation and the setting up of a council for maritime transport, according to reports. Apart from the 19 members, China, Egypt, France, Japan and the United Kingdom are dialogue partners in the grouping.



US keen for investment treaty with India



The recession hit US said it wants to enhance dialogue with India on key trade policy issues, including the bilateral investment treaty under negotiation. US Trade Representative Ron Kirk will be discussing these issues with India's Commerce and Industry Minister Anand Sharma during a roundtable at the US-India Business council.



"USTR Ron Kirk is committed to enhancing the US-India trade relationship by fostering enhanced dialogue on important trade policy matters including a US-India Bilateral Investment Treaty," the USTR said in a statement.



The two countries have been trying to bridge differences on the investment protection treaty. While India is willing to give 'post-stage' protection on private investment, the US wants 'pre-stage' benefit.



In simpler terms, if an American company suffers some losses even at the feasibility stage of an investment proposal because of change in government policies, it would like to be compensated.



Restarting Doha Trade Talks



Comparing the Doha Round of WTO trade negotiations to a 25-mile marathon, India's Commerce and Industry Minister Anand Sharma said the talks are in its last lap and hoped that countries would show flexibility in arriving at an agreement.

The need of the hour is a rule-based multilateral trading regime, which takes on board developmental aspirations of the poor countries and at the same time ensures better access for all. "That is what we shall be striving for," Sharma said at a press conference in Washington.



He said Prime Minister Manmohan Singh has made commitments that the Doha trade talks, the latest round of which was stalled in July 2008, be concluded successfully.

In what could be seen as a softening of India's stand on restarting the Doha round of trade talks, he said India is ready for "give and take" without being "frozen in pre-negotiating position" in the interest of global trade.



After wide-ranging talks with US Secretary of State Hillary Clinton and US Trade Representative Ron Kirk last week, Sharma said Prime Minister Manmohan Singh wanted the current round of talks to conclude successfully. “That is the mandate I have from the Prime Minister, who feels that the present economic crisis should be a positive message for global trade barriers to be broken down further and global trade to move, which will help economies across the globe," he said.



Protectionism would deepen recession



Union Commerce and Industry Minister, Anand Sharma has warned countries trying to introduce protectionist measures that this would not only be counter-productive, but also deepen the recession and delay recovery.



"Any kind of protectionism will not only be counterproductive, but deepen the recession and delay the recovery," Sharma said in response to a question in his interaction with Washington-based journalists at the end of his trip to the city.

"In our opinion, protectionism is counterproductive for any country, because protectionism at a time when we are talking of kick-starting the Doha Development Process would actually go against that spirit," Sharma said.



Noting that protectionism in any legal format would subvert the multilateral processes, he said such barrier would prolong the present economic recession and further delay any turnaround. Observing that all countries do eventually take action and policy measures to uphold national interest, he said at the same time India is committed to multilateralism.