Inception Workshop New Delhi, 24 January, 2013

1. Joseph George Inception Workshop New Delhi, 24 January, 2013

2. Objectives of the Project • Conduct extended analysis of diversion of trade (goods and services, exports and imports) and allied economic transactions (trade-related investments) from India vis-a-vis the participating countries in the EU-ASEAN FTA, the Trans-Pacific Partnership agreement (TPP), and the Trans-Atlantic Trade and Investment Partnership agreement (TTIP).  • Conduct sectoral analysis of diversion of trade (goods and services, exports and imports) and allied economic transactions (trade-related investments) from India and impacts thereof on labour intensive and small scale sectors so as to assess the effects on poverty so as to frame appropriate policy responses to preempt negative impacts on poverty reduction. • Conduct research- and evidence-based awareness generation and policy advocacy among the key Indian stakeholders

3. Profile of Mega External PTAs EU-ASEAN FTA TPP MYANMAR CAMBODIA INDONESIA LAOS PHILIPPINES THAILAND BRUNEI MALAYSIA SINGAPORE VIETNAM AUSTRALIA** CANADA** CHILE JAPAN MEXICO N. ZEALAND** PERU EU* TTIP US Notes: European Union (EU) consists of 28 countries including Croatia, which has recently joined EU (in July 2013); TPP contains 12 countries, TTIP has 29 countries and EU-ASEAN has 38 countries (EU 28 and ASEAN 10). Countries without formal trade agreements with India given in red. * FTA under negotiations. ** CECA under negotiation.

4. Framework for Analysis

5. Part 1. Trade in Goods Scenario (A) Trade in Goods: Sectoral Selection

6. Part 1. Trade in Goods Scenario (A) Export of Goods: Scenario 1 • Low level of value added content in vulnerable product lines, but mostly labor intensive • Likelihood of product differentiation beyond 6-digit level in non TPP markets is low • Likelihood of income loss in alternative markets is low

7. Part 1. Trade in Goods Scenario (A) Export of Goods: Scenario 2 • Relatively high level of value added content in vulnerable product lines • Likelihood of product differentiation beyond 6-digit level in non TPP markets is high • Likelihood of income loss in alternative markets is high

8. Part 1. Trade in Goods Scenario Export of Goods: Scenario 3 • Relatively high level of value added content in vulnerable product lines • Likelihood of product differentiation beyond 6-digit level in non TPP markets is very high • Likelihood of income loss in alternative markets is very high

9. Part 1. Trade in Goods Scenario (A) Export of Goods Scenario: Emerging Challenges

10. Part 1. Trade in Goods Scenario (B) Impact of WTO Plus Topics Covered under Mega External PTAs • Environmental standards • Comprehensive rules for of liberalization of trade in EGSs in TPP, move to bring rules on fisheries subsidies, regionalization of existing environmental commitments under FTAs (US – Chile; NZ-Singapore) • Rules of Origin • Likely impacts of narrow, product specific origin rules on sensitive sectors including textiles and dairy products (TPP set to follow narrow, strict cumulation, high threshold rules as in NAFTA, KORUS) • Labour Standards • Protectionist abuse of strict labour standards not likely in TPP due to political uncertainty • The direction of chapter on labour standards in TTIP uncertain • Even softer rules under mega PTAs may influence consumer preferences in member countries • Specific case studies on labor-intensive sensitive sectors needed.

11. Part 2. Trade in Services and Investment • Parameters for Services Trade Diversion Analysis • Each of the TPP member countries have about 5 preferential agreements on services on an average • NAFTA type negative-listing approach proposed, takes into account post-GATS conceptalisation of services trade • Strengthening of sector specific regulatory disciplines, expansion of coverage irrespective of modes, stress on horizontal commitments • Capacity building provision for developing countries, additional provision on ease of payments and transfers • Parameters for Investment Diversion Analysis • Additional investor protection clauses against arbitrary exploitation, losses against armed conflict, provisions for free transfer of payments and full-insurance coverage • Modern investment treaty arbitration, proposed investor-state dispute settlement mechanisms

12. Part 3. Counter Measures and Future Negotiations Implications for India’s Trade Negotiations • Domestic Preparedness: NFTP Strategies • Treaty Shopping - Prospects of dominion shift of negotiating resources to bilaterals of wider coverage with large TPP member states (CECAs with Australia, Canada and New Zealand) • Prospects of changes in negotiating positions on outstanding issues in FTA with EU and CECA with ASEAN • Positions on outstanding issues with EU; multiple tax structure on wines, auto sector tariffs, Mode 3 imports of financial services, market access in IT services and tariff structure for generic drugs. • Investment protocols under India-ASEAN CECA after services chapter, trade related investment outflow to ASEAN, concerns on primary products and reforms in domestic agro export policies • Prospects at the WT’O level and other fora (BRICS) • New multilateral rules, usage of DSB, positions on NTMs affecting industrial goods, new coalitions of excluded countries. • Possibilities for institutional mechanisms for intra-BRICS cooperation

13. Overall Framework ---Thank You---