Download pdf - Tlp 2019 phase 2 day 49 synopsis - IASbaba...has imposed tariff hikes on steel and aluminium, triggering retaliatory actions by China. A challenge to India’s economic: Inward looking

TLPPhase2–Day49Synopsis 2019

www.IASbaba.com Page1

1.Withmuchofthedevelopedworldadoptinganinward-lookingeconomicpolicy,therearechallengestoIndia'seconomicdiplomacythatneedimmediateattention.Elucidate.Introduction:According to the Economic Survey, the world is facing Hyper globalizationrepudiation in which western countries have reached its political capacities forglobalization.Thereisarisingtendencyofprotectionismacrosstheworld,especiallythedevelopedcountrieslikeUS,Japan,China,UKandEU.Body:Backtracking from trade liberalization is not new. Global Trade Alert (GTA) datarevealsasignificantreversalintradeliberalizationsincetheglobalfinancialcrisisof2008,andespeciallysince2011.In an inward-looking economic policy, protecting domestic industries against theforeigncompetitionthroughtariffs,subsidies,importquotas,orotherrestrictionsorhandicaps placed on the imports of foreign competitors. The objective of tradeprotectionism is to protect a nation’s vital economic interests such as its keyindustries,commodities,andemploymentofworkers.ConcernsaboutglobaltradehostilitiesgettingprolongedhaveescalatedlatelyinthecontextoftherecentmeasurestakenbytheUS.TheDonaldTrumpadministrationhas imposed tariff hikes on steel and aluminium, triggering retaliatory actions byChina.AchallengetoIndia’seconomic:Inwardlookingpoliciesofthedevelopedworldandprotectionismaresuchthatthedeveloping countries like India have a reason for considerable concern about thestateofcommercialpolicy.

• ReducedexportofITservicestotheUSduetotheH1Bvisaissue.• Curb on fruit and vegetable exports to Europe due to Sanitary and

phytosanitaryreasons.• ThedominanceofdevelopednationsininternationalplatformssuchasWTO

andUN.• An environment of restrictive global trade has an adverse impact on profit

growthofIndiancompanies.Higherimporttariffscanhaveanegativeimpactonearnings,byincreasingthecostofinputs.

• OpennesswillleadtoadropinsalesgrowthofIndiancompanies.WhiletradeopennessbenefitsIndiancompanies,reductioninimporttariffhurtsthemonthedemandfrontbecauseofcompetitionfromimports.



• Therehasbeen increasingpressureon India tocut tariffsanddiluteexportincentives.

WayForward:

• Increaseintariffratetoimprovetheperformanceofselectedsectors.• UseASEANandBIMSTEClikeregionalplatformstonegotiatewithdeveloped

countries.• AdvocateforamoredemocraticprocessofWTO.• WithmassivetradesurplusesinIndia'sfavour,itshouldoffergreatermarket

accesstotheneighbourhoodbyreducingtariffandnon-tariffbarriers.• Before opening up itsmarkets to the outside world, India should go for a

controlledmannerbilateralfreetradearrangementsandgiveIndianindustrytimeandspacetocompeteinmarketsaroundtheworldinthecomingyears.

• India,with theworld’s single largest cohort of youngworkers, should be amajor beneficiary of ageing populations in industrialized nations. For India,securing international worker mobility is an important objective sincedomesticopportunitiesalonemightnotfullyoptimizeIndia'sworkforce,andremittances from expatriate workers are a major source of much neededforeignexchange.

• Withincreasingprotectionisttrendsandappetiteforoverarchingtradedealsgettinglower,traditionaltradenegotiationsmightneedtobereplacedwithspecificbilateralsolutions;whichwillbeproductandcountry-specific.

Conclusion:Inward looking policies did generate some short term benefits, such as theprotection of infant and declining industries; job creation; increased income andpreservingtraditionalwaysoflife.However,theconsensusisthatthechallengesofglobalisationrequireamoreoutward-lookingapproach.2. Do you think developments on the West Bank or Hong Kong can lead tointernationalisationoftheKashmirissueaswell?Criticallycomment.Introduction:Article 370 of the Indian constitutionwhich gave special status toJammu andKashmir was revoked by the Government in August 2019 through a PresidentialOrder and the passage of a resolution in the Parliament. This action ensured theintegration of the state with the entire nation and repeal of the Article 35Aaltogether.Body:



Developments in various regions of theworld andnecessity of the Internationalcommunity:WestBank:

• When the JewishState (Israel) came intoexistence, therewasnoPalestineArab State because PalestinianArabswere not organized, unlike Zionists;they lacked the money and gun power of their own. They relied on thearmiessentbySyria,Jordan,Iraq,andEgypt,tofightfortheircause.

• WestBankistheregiononthewestsideofJordanRiver.From1950to1967it was ruled by Jordan. But Israel captured it in 1967’s war. A PalestineAuthority(PA)wascreatedandIsraelhandedoverthecivilianadministrationofGazaandWestbanktothisPA.

• The current Israel-Hamas conflict, sporadic ceasefires, economic blockades,violentuprisingsandmilitantmovementsarefrequentincidentsplaguingtheregionevennow.

• VariousUNresolutionsandglobalinterventionshavebeenaccompaniedwithkeyoutsideparties—theUN, theUnitedStates, theEUand theneighboursinterveningstrategically.

HongKong:• HongKongissituatedonthesoutheastcoastofChina,HongKong’sstrategic

locationonthePearlRiverDeltaandtheSouthChinaSeahasmadeitoneofthe world’s most thriving and cosmopolitan cities. Hong Kong becameaSpecialAdministrativeRegion(SAR)ofthePeople'sRepublicofChinaon1July1997.

• TheinterferenceofthecommunistregimeofChinaintheinternalaffairsofHong Kong and its oppressive policies have led to various pro-democracyprotestsforautonomyinrecenttimes.

• Massive protests in Hongkong have erupted against a government plan toallow extradition to mainland China. Civil unrests and severe economicclampdownsarebeingwitnessedintheregion.

SituationinKashmirandwhyitshouldnotbeinternationalized:• UndertheShimlaAgreementthetwocountriesnotonlyagreedtoputanend

to“conflictandconfrontation”butalsoworkforthepromotionofafriendlyandharmoniousrelationshipandtheestablishmentofdurablepeace inthesub-continent,sothatbothcountriesmayhenceforthdevotetheirresourcesandenergiestothepressingtalkofadvancingthewelfareoftheirpeoples.

• Article370oftheIndianConstitutionisa‘temporaryprovision’whichgrantsspecialautonomousstatustoJammu&Kashmir.

• Theissueofcross-borderterrorismaffectingIndia,India’seffortstomaintainpeace and stability in J&Kand issues relating toArticle 370 are an internal



matter of India which is aimed at improving growth and economicdevelopment, democracy and prosperity for the people of Jammu andKashmir.

• It should also be noted that out of the 3 main administrative divisions –Jammu,Kashmir,andLadakh–insurgencyanddemandforindependencearehighonlyintheKashmirValley.MostofthepeopleinJammuandLadakhstillwishtobepartof India,eventhoughtheydemandautonomy inadifferentway.

• Kashmirwasandstill isan integralpartof India. Ithasapluralandsecularculture–justliketherestofIndia.UrgentstepsshouldbetakentobridgethegapsoftrustdeficitinthemindsofKashmiriyouth.AllKashmirisshouldgetthedueshare inthegrowthstoryof Indiawhichcanberealisedonly if it isintegratedwiththerestofthenation.

Challenges:• UNrefusestoformallydeclarePakistana‘terroriststate’• Pakistan’s military, identified as anti-India elemental force in Pakistan,

remainsopposedtoanyunderstandingwithIndia• RisinginfluenceofradicalextremistideasandideologiesinsidePakistanand

subsequentinfluenceonyouthofKashmirmayleadtoacallforInternationalintervention.

Wayforward:Indianeedstoestablishanationalsecuritydoctrineinordertodealwithallsecurityissues.AstrongneedforIndiatochangeitsapproachfromResponsivetoProactiveismore suitable at present. Immediatemeasures to improve andmainstream J&KpopulationeconomicallyandsociallywiththerestofIndiacanhelpcurbthefeelingofneglectandbackwardnessoftheregion.Conclusion:For the past 70 years, India has consistently resisted any third-party mediationproposalandrecentlyanoverwhelmingmajorityintheUNSecurityCounciltoohasstressedKashmirisabilateralmatterbetweenNewDelhiandIslamabad.Thus,bothsides should exercise restraint and settle the matter via peaceful talks andnegotiations,withthestrictendtostatesponsoredterrorismbyPakistan.3.HasBrexitaffectedIndiainanyaway?Analyse.IntroductionBrexit isanabbreviation for"Britishexit," referring to theU.K.'sdecision ina June23, 2016 referendum to leave theEuropean Union(EU). The vote's result defied



expectationsandroiledglobalmarkets,causingtheBritishpoundtofalltoitslowestlevelagainstthedollarin30years.BodyFacts:

• EUandIndiawouldemergeasstrongtradepartnersthroughenforcementofBTIA.

• EUis India’s largesttradingpartneraccountingforapproximately13%of itstotal world trade, while India is EU’s 10th largest trading partner. India isreliantonEUformachinery,nuclearreactors,opticalandphotoequipment,aircraft,etc.

• EU’s top imports from India includemineral fuels, oil, distillation products,organicchemicals,textiles,etc.Thekeysectorsoftradeinservicesbetweenthe twoare seaandair transport, computerand information, financial andbankingservices.

PositiveeffectsofBrexitinIndia:• Toresetlegalterms:BrexitisanopportunityforIndiatoresetthelegalterms

of its tradewith theUKandEU, at themultilateral level, and through freetradeagreements.

• Students friendly: Before Brexit, British universities were forced to offerscholarshipsandsubsidies to thecitizensof theUKandEU.Brexit freesupfundsfortheotherstudentsandmoreIndianstudentsmightbeabletogetscholarships.

• Increasestourism:ReductioninpoundvaluewillreducetravellingcosttotheUKandwillmakeitagoodtraveldestination.

• Huge investment: Brexit will help strengthen our tieswith Britain becauseIndia's focuson innovationandentrepreneurshipstillmakes itanattractivedestinationforoutsourcingandinvestment.

• Goods and services: According to the UK's Department for InternationalTrade (DIT) figures, total trade in goods and services between the UK andIndiawas18billionpoundsin2017,a15percentincreasefrom2016.

• Currentaccountdeficit:Lowercommodityprices,crudeoilpricesmayhelpnarrowingcurrentaccountdeficit(CAD)

• Trading partners: The UK and the EU are losing trading partners in theprocess.Sotheywillbothbelookingforreplacements.Here,Indiacanplayacrucialrole.Wemayseeenhancedcooperationinsegmentsliketechnology,cybersecurity,defenceproductionandfinance.

NegativeeffectsofBrexitinIndia:



• Shorttermeffects:Automobile,PharmacyandITmightbethemostaffected.NASSCOM has predicted that the effect of Brexit will be felt on the $108BillionIndianITsectorintheshortterm.

• Automobile industry: In the automobile industry, Brexit may lead toreduction insalesandcompaniesthatderivegoodrevenuesofprofits fromBritaincouldgethurtmajorly.

• Disruptions: Indian companies would need to recalibrate Europeanoperations,likesettingupanadditionaloperatingcompanywithinEuropeanUnion.Thismeansshorttermdisruptionswillhaveafinancialimpact,asalsotakeupmanagementtime.

• Immigration: Because of the large number of immigrants from EU,UK hasrestrictedimmigrantsfromotherpartsoftheworld,whichhadanimpactonIndians.

• Restrictions: Post Brexit, immigration into UK of Indians may not becomeeasierastheUKwantstoplacequantitativerestrictionsontotalnumberofimmigrants, and only a few Indianswith special skillsmay find it easier toworkintheUK.

ConclusionIndia should re-negotiate with the UK and EU the World Trade OrganizationSchedules of Concessions, for both goods and services, should resume its FTAdiscussionswiththeEU,andshouldpreparetolaunchFTAtalkswiththeUK.4. What are India’s stakes in Africa? How is India seen and perceived by themembersoftheAfricanUnion?Discuss.Introduction:Africa is now being tipped as the global economic growth engine of the comingdecades.Itsvastnaturalwealthandfavourabledemographicprofileareexpectedtoturn the continent as awhole into a growth engine that is expected to run fasterthananyoftheworld’scurrenteconomicpowerhouses, includingChina,BrazilandIndia.Body



India’sstakesinAfrica:

• With faster growth trajectory for India and need for energy and otherresources, Africa remains a crucial source of natural resources.Ex: crude oil and gas has emerged as Africa’s leading export to India,diversifyingsourcesofsupplyfrommiddle-east.

Justnotresources:• IndiaisnotsolelyresourcedriveninAfricanengagement.Itisaboutfinancial

services,telecom,hospitalsandeducation.The50%ofallglobalFDIinAfricaisintoservicesandnotresourcesanymore.Resourcesisbig.Butitisnowamajor service economy and that is what India is competing in as India isservicedriveneconomy.

Market:• Fordevelopingnewmarkets.MostAfricancountrieswillbe“middleincome”

by 2025 providing huge trade and investments opportunities as well asmarketforIndianexports.

Geo-political:



• Africa remains vital for India’s emergence as a global actor in theinternational institutionalarena.Ex: Inreformingexistingglobalgovernancestructures likeU.N.SecurityCouncil (UNSC),andshapetheemergingglobalregimes related to food, energy, climate,water, cyber security, and use ofouterspacefordevelopmentpurposes.

TocounterChina:• IncreasingChinesepresence (militarybaseatDjibouti)andsignsofChinese

neo-colonialism.

Growth:• To achieve sustained economic growth over long term at a time when

westerneconomiesshowsignsofsaturationandincreasingprotectionisminglobaltrade.

Terrorism:• International terrorismhasbeenontherise inNorthAfrica inrecentyears.

WhileIndiaisnotdirectlyaffectedbythelocalizedterroristorganizationsinAfrica, the troubling links between Somali and other groups with militantgroups in the Afghanistan and Pakistan region could significantly threatenIndia’sfuturesecurity.

Security:• Secure freedom of navigation in sea lines of communication protecting

India’sinternationaltrademovingbysea.

IndiaasperceivedbyAfricanunionmembers:

• India has a “comparative advantage” over China inbuilding connectivityprojectsandtradecorridorsinAfricaduetoitscompatibilityandproximitytothecontinent.

• India is seen as a friendly nation, helping the Continent in need withdevelopmentalinitiativessuchasIndianTechnicalandEconomicCooperation(ITEC),Asia-AfricaGrowthcorridor,andPanAfricae-networketc.,aimedatbuilding institutional and human capacity as well as enabling skills andknowledgetransfer.

• Indian engagement lays emphasis on the long term: enhancing Africa’sproductivecapacities,diversifyingskillsandknowledge,andinvestinginsmallandmediumsizedenterprises.

• Ontheotherhand,China’sapproachismoretraditional:resource-extraction,infrastructuredevelopmentandelite-levelwealthcreation.

• Some of the countries like Sudan gave India share in oil field which wascontrolled largely by China because they didn’t want China to have 100%shareinoilfield.

• Nigeriaalsodidthesamewhichwantedthatalloftheirresourcesshouldnotbecontrolledbyonecountry.



• President of Zambia ran on a wildly anti-china platform with increasedChineseinvestmentandlabourers,givingnojobstolocals.

• ThebeneficiaryisVedantawhichwasallowedtotakecopperindustrytothepointthatVedantaisslatedtobe26%ofZambia’sentireGDP.

• IndiahasbenefitedandthebulkofworkdoneinAfricaisrunningonitsownscheme.

• Atthecoreofthis istheriseof Indianprivatesector investmentalongwithlargenumberofstateownedenterprises,PSUsinvesting,especiallyinoilandgasindustry.

• IndiahasextendedLineofCreditworthmillionsofdollarsinvariedareastotheAfricancountries.

• Theterm ‘Indo-Pacific’is a recognitionof India’spivotal role inestablishingtradingregimesandrules-basedmaritimefreedomofnavigation,andnotedthatAfrica “counts”on India toplayavery importantpartstrategicallyandpoliticallyforthesameIndiaisa“pivot”intheIndo-Pacificregionandithas“playeda critical role in creating aconducivemaritime regime” for a rules-basedfreedomofnavigation.

So, finally The African countries see India as a emerging global power and as acountrywhich can counter china’s Dominance in the continent. At the same timeThey look India as potential source of investment, grants and a major strategicpartnerintheIndianoceanregion.ConclusionHence, it is critical for India to viewAfricanot just as adestination for short-termreturnsbutasapartnerformediumandlong-termeconomicgrowth.5.Howareregionaltradingblocsaffectingworldtrade?WillithaveanyimpactonIndia?HowisIndiaplanningtocopeup?Discuss.IntroductionAtradeblocisapreferentialtradeagreementbetweenarangeofnations,aimedatsignificantlyreducingorremovingtradebarrierswithinthememberstates.Regionaltrade blocs are formed by neighbouring countries or countries that are in closeproximitytoeachother.BodyRegionaltradingblocsaffectingworldtrade

• FavouritismcanbeobservedbytheTradingBlocsuponitsmembercountries.Thetariffsandquotasthatarebeenfixedareonly in lightofbenefitingthetrade to the member countries. The regional trade bloc members followRegionalismagainstWorldTradeOrganization.



• Increased interdependenceon economic performance in other countries intradingblock.IfEurozonegoesintorecession,itwillaffectallcountriesintheEurozone. However, this is almost inevitable even if countries are notformallyinatradingblockduetoacloserelationshipbetweentradecyclesindifferentcountries.

• Whenatradingbloctransformsintoapoliticalunion,thesovereigntyofthemembercountriesisbeinglost.

• Greater Bargaining power for such groupings if they put up collective onmultilateralplatformssuchasWTO.

• The non-member countries are provided access to the RTB membercountries,onlyafterchargingthetaxes.Concessionsareprovidedonlytothemembercountries.

• Regional trading blocs, regardless of their expansion properties withreference to intra-regional trade, almost necessarily encompass some formoftradediversionwithregardtothepointthatlower-costproducerswhonotbelongtotheregionaltradingblocarediscriminatedagainst,thusdebilitatingtheefficientglobalallocationofresourcesandultimatelyreducingtheglobalwelfare.

• Regional trade blocs that lower the prudence of states nations to pursuetrade liberalisation with non-members are likely to turn into barriers tomultilateralism.Forexample,ifChinahasalreadybeensuccessfulinfindingamarketpartnerintheUnitedStates,itwoulddeveloplittleinterestforafreetrade arrangement with the United States. But its less thriving rival, India,wouldbekeentosignabilateraltradeagreementwiththeUnitedStatesandhence capture China’s share of theUnited Statesmarket; not bymaking abetter or less costly product, but by obtaining special treatment under theUnitedStatestradelaw.OnceIndiaobtainsitsspecialprivilege,itwouldnothave interested in less interest in attending WTO meetings and signingmultilateral free trade agreements that would instead eliminate thoseprivileges.

• Membersof the tradingblocmaynot realise additional economicsof scalefrom global trade liberalisation, which often offers only meek opening ofinternational markets. Regional trading blocs, which often offer morewidespreadtrade liberalisation,mayenable local firmstoachieveadequateproductionandhencedepletescaleeconomies.

• Memberstateofatradeblocmaywanttodevotetheresourcestheyhavetocreating robust regional connections rather than investing them ininternationaltalks.

However,therearesomepositiveaspectstoo,RegionalTradingblocactasbuildingblocks to liberalization of global economy. As, regional blocs may attain moreeconomic integration than do multilateral talks because of greater harmony ofinterestsandlesscomplicatednegotiatingprocedures.RegionalTradingBlocImpactonIndia



• India’s existing agreementswith SouthKorea, Japanand theAssociationofSouth EastAsianNations (ASEAN) areoftendeemed tohavebenefited thepartner countries at India’s expense. The import-export ratio with thesecountriesdeterioratedintheyearsfollowingtheimplementationofthetradeagreements. Even as partner countries have benefited, Indian exports totheseregionshaveremainedlacklustre.

• India’sinabilitytogainmarketshareintheseregionsmaybepartlyexplained

byitslackofcompetitivenessinexports.UnlessIndiaremovesthestructuralbottleneckshurting its exports, it is unlikely tomakebig gains in theworldmarket.

• GovernmentthinktankNITIAayog,inanoteonfreetradeagreements(FTAs)andtheircostsforIndia,hasarguedthatthecountryneedstorethinkjoiningthe Regional Comprehensive Economic Partnership (RCEP) as it will bedisastroustoprovidemoremarketaccesstoChina,which isakeyplayer inthegrouping.

India’splanning

• AtRCEP,FTAbeingnegotiatedeveninservices, itwilladdtotheadvantagefor India where they have a comparative advantage over other nations,especially in the context of Information Technology related services,healthcareservicesandeducationalservices.

• MakeinIndiaProgramthataidedwiththeExportPolicycanhelpinreducingthetradedeficitwiththeregionalblocs.

• SomeofthesectorsthathavebeenidentifiedaspotentialsourcesofIndia’sexport growth impulsesunder RCEP to the tune of approximately $200billion. Exports includeprocessed food, gems and jewellery, metalmanufactures, refined petroleum, chemicals and pharmaceuticals, leathergoods;textilesandclothing,automobilesandparts,electricalmachinery,andpartsofaircraftandspacecraft,etc.



ConclusionThe focus needs to be on where India can promote its exports, it does notnecessarilymeanenteringintoregionaltradeagreements.Indianeedstobecarefulin weighing each trade deal on its own merit. When it comes to free tradeagreements, no dealmay be better than a bad deal. RCEP negotiations especiallywithChinaneedtobeproperlypondereduponandplanned.