PM needs to oversee trade policy and negotiations

I was sad to see our continued hesitation in joining the Regional Comprehensive Economic Partnership (RCEP) despite a strong stance taken by the prime minister (PM) earlier to join. The government is now asserting that there is room still left for joining it, or we should Look West and not just Act East when the European Union (EU) is on the decline, and US policy is uncertain, with these countries are likely to be more demanding than the RCEP. These views clearly reflect a total lack of trade negotiating strategy which is compatible with the new and uncertain global trade landscape.

We urgently need an institutional reform for trade policy. We need our PM to directly be involved with the new institutions. Our PM has shown his leadership by single-handedly overcoming our poor business climate and massive trade transaction costs. We now need him to oversee trade negotiations, continue with trade and logistics reform, and make our economy competitive.

Given the cross-cutting nature of the 21st-century trade agenda, leadership should not rest with any line ministry. What is needed is an “apex entity” that has a clear mandate from the PM to consult with stakeholders and manage the process of developing the strategy. This entity cannot be solely responsible for implementation as that will by necessity involve many players in and outside the government. Instead, its role in the implementation phase is to act as coordinator and convener, and to have the mandate to monitor and assess implementation by relevant agencies within the government.

The proposed apex entity can be called the National Trade Policy Council (NTPC). It will ensure that all agencies that are involved with trade activities — line ministries, regulatory bodies, state governments —know what the goals are. They are fully informed of the priorities that are defined by the strategy, and use it as a framework that guides their activities.

The NTPC should be chaired by a minister who reports directly to the PM. The Council should include senior representatives of all relevant ministries and regulatory agencies. It should have the mandate to create technical committees that bring together sectoral or issue-specific experts to provide inputs on the design or implementation of specific dimensions of the trade strategy.

The NTPC could have two offices — Office of the Chief Trade Negotiator, and the National Logistics and Trade Facilitation Council (NLTFC).

Chief trade negotiator

Its office could be responsible for all trade negotiations at multilateral, regional, and bilateral levels. Trade negotiations are a strategic economic objective, and not an administrative one. It is critical to have a small dedicated secretariat that is not burdened with day-to-day administrative responsibilities to deal with it. The multilateral unit could be responsible for all negotiations at the World Trade Organization (WTO) and to develop the agenda and policy position for India for G20 discussions, as well as guide India's engagement with the United Nations Conference on Trade and Development (Unctad).

The bilateral/regional negotiations unit could be responsible for all bilateral and regional trade and economic engagement with three sub-units: Southeast Asia (SEA), Africa, West and Central Asia (AWCA), and Europe and the Americas (EA). SEA should be high-priority, as India’s role in SE Asia and its integration with Asian production, trade and investment networks are critical to its economic future. The RCEP is the main mega-regional agreement for that.

National Logistics and Trade Facilitation Council

I have outlined this in the PM’s Economic Advisory Council October 2018 Report on logistics development. The outlines are:

• Establish a National Council of Logistics and Trade Facilitation outside the line ministries reporting to the prime minister via the NTPC
• It must consist of the ministries and departments related to logistics and trade facilitation, and chief ministers of concerned states
• Private sector and trade stakeholders should be represented
• The logistics wing under the commerce ministry be made a dedicated secretariat
• Development of robust performance outcomes for logistics and trade facilitation
• Monitor performance through an online dashboard and fix responsibilities for time-bound corrective action
• Facilitate policy development and multi-stakeholder coordination
• Regular publication and dissemination of data on key sectoral outputs

There is an urgent need to create the 21st-century institutional framework described here for India’s global trade and investment engagement. In all developed and successful economies, strategic trade decisions are taken at the highest political level, and not left to the narrow focus of line ministries whose task should be the detailed implementation of these strategic decisions under the NTPC’s close monitoring. The PM should urgently create the NTPC and test it out with a firm and decisive position on joining or not joining the RCEP as a founding member by February 2020.

The writer is a former economic advisor to the Union commerce ministry