India's annual export losses may reach $50 bln if economy not opened up to world trade: US govt policy adviser
A senior policy expert attached with US government has sharply criticized the Government of India for not doing enough in opening up its economy to the world. Pointing out that “India’s international competitiveness is lagging badly”, the expert says, “The shares of both manufactured and services exports in the economy have stagnated for over three years”, and “the responsiveness of Indian imports to global growth has declined sharply.”
The expert, C Fred Bergsten, says, India’s :merchandise trade deficit has hit record highs in the last two years”, and the country’s “competitiveness problem is compounded by its absence from the world’s new megaregional trade agreements, especially the Trans-Pacific Partnership (TPP) but also the Transatlantic Trade and Investment Partnership (TTIP)”.
In his paper titled “India’s Rise: A Strategy for Trade-led Growth”, Bergsten says, what is particularly regrettable is that the Narendra Modi government has failed to take advantage of the offer of President Barack Obama in January 2015 during his visit to New Delhi, asking India to join the Asia-Pacific Economic Cooperation (APEC).
Bergsten is a member of the US President’s Advisory Committee for Trade Policy and Negotiations, and chair, Private Sector Advisory Group to the US-India Trade Policy since 2007. He wrote the paper for the Washington-based Peterson Institute for International Economics, a private nonpartisan, nonprofit institution. It was released on the eve of Modi’s visit to the US.
Refusal to be part of international trade agreements would mean, says the expert, India’s annual export losses would "approach $50 billion", even as pointing to the “danger” of India being “left behind by the world trading system”.
Bergsten says, Modi may have proposed “a series of sweeping reforms”, though adding, his “ambitious” programmes would not be enough, as India still needs to “greatly expand its engagement in global markets to both meet its economic objectives and establish its leadership role in the world economy.”
Batting for the need to “sharply increase its exports of both manufactured goods and services to achieve its target growth rate (10 percent per annum)”, the expert says, “No country, including India during its growth spurt of the past decade, has achieved such expansion without deepening its interdependence with the world economy.”
He predicts, “India could experience huge export gains of more than $500 billion per year (a 60 percent increase, more than any other country) from joining an expanded TPP or participating in a comprehensive Free Trade Area of the Asia Pacific (FTAAP), now being considered by APEC. Indian national income would expand by a whopping 4 percent (over $200 billion) as a result.”
Regretting that Indian trade policy has failed to pursue existing “opportunities”, Bergsten underlines, “The country has been unwilling to put its own sensitive sectors on the table and has thus been unable to persuade other countries to open markets that would be meaningful to India.”
The expert believes, India has “negotiated low-quality agreements and currently seems poised for more of the same, such as the Regional Comprehensive Economic Partnership (RCEP) with a number of Asian countries.”
By contrast, the expert says, China has “used liberalization of its trade and investment policies, required by its entry into the World Trade Organization (WTO), to broaden and deepen the internal economic reforms that sustained its dramatic double-digit growth.”
Obama, says the expert, had told Modi during his visit to Delhi in January 2015 that he was “a willingness to consider India’s interest in joining APEC”. Wondering why India has so far not responded, he insists India must “immediately accept Obama’s offer and seek membership in APEC.”
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