India’s export not to hit in a major way by the TPP trade pact

With India having already entered into bilateral and regional trade pacts with some members of the Trans Pacific partnership (TTP) grouping and a few more are in the pipeline, the Commerce Ministry said that India’s exports will not be hit in a major way by the TPP pact signed between the 12 Pacific rim countries, including the US.

According to the Commerce Ministry, had India joined the TPP, the negative fall-outs would have been greater. The intellectual property rules under the pact would have led to ever-greening of several off-patent drugs and sent prices of essential drugs soaring while the investor-state dispute rules would have infringed on the country’s policy space.

The TPP is a regional trading arrangement between the US, Japan, Canada, Australia, New Zealand, Singapore, Malaysia, Vietnam, Brunei, Peru, Chile and Vietnam. The pact, yet to be ratified by each country, will result in the largest trading bloc with zero or low tariffs on most goods, easier investment norms and services flow but tougher IP rules and laws to protect corporate interests.

Abhijit Das from the Centre for WTO Studies pointed out that all the number crunching that has been done till now on the effects of the TPP on India do not show losses beyond $10 billion, and that too in 2025.

For instance, the US-based Peterson Institute of International Economics has estimated a 0.3 per cent export loss for India in 2025 on estimated exports, which would translate into no more than $10 billion, Das added.

While some items, such as textile and yarn, may face issues in markets like Vietnam because of rules in the TPP mandating use of local inputs by members to be eligible for zero tariffs for final products, for most other products Indian items are not likely to experience preference erosion because of the country’s trade pacts with individual members of the group.

India already has entered into free trade agreements (FTAs) with Japan, the ASEAN, Singapore and Malaysia. It is about to finalise similar pacts with Australia and the 16-nation RCEP. FTA negotiations with New Zealand and Canada are also in full-swing and they are looking at expanding the preferential trading agreement with Chile. All these pacts would ensure that exporters don’t lose their markets, the official said.