The proposed Trans-Pacific Partnership (TPP) between the US and other Pacific economies will adversely impact Indian exports and the government should develop long-term strategies to stay relevant in global trade, a senior researcher here said.
"The effects are likely to include the challenges of upgrading to new quality standards of the TPP markets and developing long-term strategies for negotiating 'new' issues in trade governance," observed Amitendu Palit, a Senior Research Fellow at the Institute of South Asian Studies, a think tank at the National University of Singapore.
"India's Foreign Trade Policy (2015-2020), while noting the advent and some of the implications of the TPP, does not spell out any clear strategies for addressing these," he wrote in a research paper titled - Trans-Pacific Partnership, India and South Asia.
Otherwise, Indian exports will face increasingly adverse prospects in the TPP markets, as well as in the markets of countries that are negotiating other mega-Regional Trade Agreements (RTAs), like the European Union, Palit points out.
A lack of strategic vision for mega-RTAs can gradually isolate India and South Asia from a significant part of the global trade, he said, adding, "India must look closely at the global trade agenda set by the TPP for staying relevant in world trade".
With its 12 members - Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the US and Vietnam accounting for around two-fifths of the world output and a quarter of global trade - the TPP's rules and writ will cover large chunks of the world economy and trade.
Many of the same rules might also be implemented under other mega-RTAs that are being currently negotiated, he said.
Given that several TPP members are major trade partners of South Asian countries, these impacts would have both short- term and long-term implications, spread over time, he said.
TPP is expected to make 11,000 tariff lines duty-free for its members. This will affect the competitiveness of exports from countries that currently enjoy duty-free access in the TPP member-markets.
The biggest erosion of competitiveness will be in the US.
"The US offers duty-free access to around 5,000 items of export from developing countries under its Generalized System of Preferences (GSP). The preferences apply to all countries from South Asia."
TPP members like Australia, Japan and New Zealand, which do not have these preferences now, might get duty-free access for many of the products covered by the GSP scheme.