Mitras Analysis of News : 10-05-2017

Print Friendly, PDF & Email

1.RCEP may hurt local industry (Down to Earth)

2.Duplication is not the cure for Indian Science (The Hindu)

3.Bonn climate talks begin to further implementation of Paris Agreement (Down to Earth)

4.Explained: Japan to change its Pacifist Constitution

 

1.RCEP may hurt local industry? (Down to Earth)

 Synoptic line: It throws light on the potential disruption which can be caused by RCEP along with some potential advantages. (GS paper III)

Overview

  • Mega regional trade deals are in vogue in an otherwise fragile global economy. In an environment of falling aggregate demand, these trade deals are seen as a means to insulate economies from market uncertainties.
  • However, they pose their own set of challenges as well which can disrupt the small manufacturers.

Background

  • Three important mega regionals are currently under negotiation: the Regional Comprehensive Economic Partnership of Asia and the Pacific (RCEP), the Trans-Pacific Partnership (TPP), and the Trans-Atlantic Trade and Investment Partnership (TTIP).
  • It is expected that these agreements, once concluded and implemented, will set the stage for a new generation of global trade and investment rules.
  • From India’s point of view, the RCEP presents a decisive platform which could influence its strategic and economic status in the Asia-Pacific region and bring to fruition its “Act East Policy.” It is expected to be an ambitious agreement bringing the five biggest economies of the region- Australia, China, India, Japan and South Korea into a regional trading arrangement.

RCEP

  • The Regional Comprehensive Economic Partnership (RCEP) is a so-called mega-regional economic agreement being negotiated between the 10 ASEAN (Association of South-East Asian Nations) governments – Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam and six other countries having existing free trade agreements with ASEAN: Australia, China, India, Japan, South Korea and New Zealand.
  • The 18th round of negotiations on RCEP is being held in Manila, Philippines among 16 countries that account for 50 per cent of the global population and 29 per cent of the world’s GDP.
  • The agreement will considerably reduce import duties for a range of goods in agriculture, manufacturing and service industries, allowing foreign companies to compete with domestic counterparts. According to India FDI Watch, RCEP mandates import duties in the range of 0-3% for member countries. India’s current duty on industrial goods is 10 per cent at an average, and 32.5 per cent for agricultural products.

How RCEP may be disruptive

  1. According to Civil society representatives, the agreement in being discussed secretively. In the past four years and to this day, no text has been made available to members of the public, Parliamentarians, civil society or media.
  1. Reduction of import duties to promote global value chain may lead to mass layoffs, low wages and further exploitation. RCEP undermines technological development in developing countries and hence does not work either for creating sustainable employment or for local value addition in developing countries
  1. Reduction of duty is likely to put India at disadvantage in its trade ties with China. India has a large trade deficit (Rs 3.45 lakh crores in 2015-16) with China, which will increase after RCEP. Companies producing steel and heavy machinery have already raised the concern that this would lead to displacing of local manufacturing by Chinese imports.
  1. RCEP will include the infamous Investor-State-Dispute-Settlement Mechanism (ISDS) that allows foreign companies to challenge policies and judicial decisions in secret arbitration cases. There are numerous cases, for example, between Veolia (French company) and Egypt, that show how foreign companies can challenge any change in labour laws (such as the Minimum Wages Act or maternity benefit provisions in India) as it increases in their cost of operation. In addition to the compensation demanded by companies, the litigation itself is financially devastating.
  1. The wholesale duty-free import of goods by e-commerce giants like Alibaba in China will threaten local products developed by SMEs and domestic job creation in those segments.

Some possible advantages with respect to RCEP

There are three immediate benefits that should be noted:

  1. The RCEP agreement would complement India’s existing free trade agreements with the Association of South East Asian Nations and some of its member countries, as it would deals with Japan and South Korea. It can address challenges emanating from implementation concerns vis-à-vis overlapping agreements, which is creating a “noodle bowl” situation obstructing effective utilization of these FTA.
  • In this respect, the RCEP would help India streamline the rules and regulations of doing trade, which will reduce trade costs. It will also help achieve its goal of greater economic integration with countries East and South East of India through better access to a vast regional market ranging from Japan to Australia. The RCEP can be a stepping stone to India’s “Act East Policy.”
  • This is particularly important because India is not a party to two important regional economic blocs: the Asia-Pacific Economic Cooperation and the Trans-Pacific Partnership. The RCEP would enable India to strengthen its trade ties with Australia, China, Japan and South Korea, and should reduce the potential negative impacts of TPP and TTIP on the Indian economy.
  1. Second, the RCEP will facilitate India’s integration into sophisticated “regional production networks” that make Asia the world’s factory. The RCEP is expected to harmonize trade-related rules, investment and competition regimes of India with those of other countries of the group.
  • There would be a boost to inward and outward foreign direct investment, particularly export-oriented FDI.
  1. India enjoys a comparative advantage in areas such as information and communication technology, IT-enabled services, professional services, healthcare, and education services. In addition to facilitating foreign direct investment, the RCEP will create opportunities for Indian companies to access new markets.
  • India is well placed to contribute to other countries in RCEP through its expertise in services

Way ahead

  • It is vital for India to ensure that the RCEP is truly comprehensive and does not just focus on market access for goods. Keeping these benefits in mind, India will need second-generation reforms of its domestic economic policies, including those that reform its factor markets, to make its trade more competitive.
  • Hence, reforms along these lines can only help India better access other markets, and will mitigate some of the repercussions for the Indian economy with respect to agreement.

Question What are the possible alternatives that India should use to make most out of the regional trade agreements? 

 

2.Duplication is not the cure for Indian Science (The Hindu)

 Synoptic line: It throws light on certain systemic challenges in science regime in India.(GS paper III)

Overview

  • Despite impressive economic growth and huge systemic reforms, scientific research continues to lag behind the country’s possibilities.
  • Moreover, creation of duplication agencies to promote scientific development such as recently proposed SPARK will not help to reviving ailing science regime in India.
  • Rather consistent hard work and meeting the sectoral challenges remain an area of concern.

SPARK

  • Heads of India’s top scientific, administrative bodies have jointly conveyed to Prime Minister that science in India needs a major revamp.
  • They have proposed an over-arching science and technology body that marries research and industry, and will report directly to the Prime Minister.
  • SPARK (Sustainable Progress through Application of Research and Knowledge) will have an independent science and technology authority that will have two parallel arms. One, a ‘discovery arm’ that can organise the expertise of various organisations across states and regions to solve a basic research problem. Two, a ‘delivery’ arm that will closely work with industry and evolve public private partnerships. Such an authority, the report envisions, will report directly to the Prime Minister.
  • It will be a proposed initiative to synergise science activity in India.

Analysis of the SPARK

  • A new, more efficient way of managing science is surely welcome, but one needs to put in a lot of thought before taking any action.
  • India already has bodies that were, in their wisdom, conceived as umbrella organisations that can pool the intellectual and technological resources of organisations and direct them towards specific missions. There is no lack of sound advisory bodies and committees within these departments. As for overarching bodies, we already have the Scientific Advisory Committee to the Prime Minister and the Principal Scientific Adviser to the Government of India.
  • Even, none of their recommendations had resulted in concrete actions. In the end, they have remained toothless then why do we need such a third body? The science departments are too different from one another to come under the purview of one “overarching” body like SPARK.
  • The plain fact is that we do not have so much to manage. The report of top science administrators that recommended the setting up of this independent authority is correct in that “the stature of Indian science is a shadow of what it used to be” but this is not because of “misguided interventions”.

Some other impending issues in Science

  1. The first grand challenge before Indian science is that of building some irreverence. Our students are too reverent. Our existing hierarchical structures kill irreverence. Promoting irreverence means building the questioning attitude. It means education systems that do not have the rigid unimaginative curricula, it means replacing ‘learning by rote’ by ‘learning by doing’ and to do away with the examination systems with single correct answers.
  1. One problem is the comparatively low level of overall research investment — the present 0.9% in GDP is notably less than China’s 1.5% or the 2.6% of the US. This value must increase if the country is serious about closing the gaps with leading nations. Insufficient scientific research in India’s private sector seems to be part of the problem. The large pharmaceutical sector, for example, remains dominated by the fabrication of generic products rather than original formulations.
  1. At present, a large section of the country’s public research is concentrated in national research centres such as the S. N. Bose Center, the Raman Research Institute and organizations such as the Indian Association for the Cultivation of Science. In comparison, research at universities has been neglected.
  1. It is not only in terms of research where India’s universities are left behind. Its multifaceted higher education structure includes elite Indian Institutes of Technology (IIT), and their more recent spin-offs, the Institutes of Information Technology. Through their centralized entrance exams the IITs enforce tough selection, and their students are educated to a very high standard. However, to be able to lift a population of 450 million out of poverty and to have them participate in the country’s economic development, higher education needs to be a priority.

Way ahead

  • India does not need global goodwill to succeed in science. It needs hard work, honest management and a critically large base of experts.
  • Moreover, decisions on new initiatives like SPARK should not be taken within government departments in Delhi following a proposal from one closed administrative group to another. A broad-based consultation with stakeholders is a must.
  • The government has created new institutions such as Indian Institute of Science, Education and Research. It has created schemes such as Innovation in Science Pursuit for Inspired Research (INSPIRE), for drawing and retaining millions of young bright children into science. There are clear signs of reversal of brain drain. Hence, govt. should constantly work in this direction.

Question: What reforms should be initiated to make scientific development in India on par with developed nations? 

 

3.Bonn climate talks begin to further implementation of Paris Agreement (Down to Earth)

 Synoptic line: It throws light on the ongoing The Bonn Climate Change Conference. (GS paper III)

Overview

  • The Bonn Climate Change Conference 2017, organized by the United Nations Framework Convention on Climate Change has started in Bonn, Germany amid growing speculations about the present and future US engagement in the Paris Agreement.
  • The conference will cover areas like Climate Changes, Green house effects, stabilize greenhouse gas concentrations in the atmosphere, green urban, clean energy. Bonn will focus on specifics like how countries can report information about their emissions, with a final “rule book” due to be completed by 2018.
  • Under the Paris deal, negotiated by world leaders in November 2015, nations agreed to nonbinding pledges to cap or reduce greenhouse gases emissions and limit global warming to a maximum of 2 degrees Celsius above pre-industrial levels.

US uncertainty will impact developing countries

  • Under the Paris deal, the US committed to cut its emissions 26 to 28 percent by 2025, compared to 2005 levels. A number of regulations implemented by previous government to help meet that target have been dismantled since new government entered into office.
  • US uncertain decision for funding for the United Nations Framework Convention on Climate Change (UNFCCC), Intergovernmental Panel on Climate Change, Green Climate Fund, Clean Technology Fund and the Strategic Climate Fund, calling for immediate review of the Clean Power Plan; this will have a direct impact on addressing climate change globally.
  • The slash of funding will have a direct impact on the implementation of climate action plans or Nationally Determined Contributions, much of which is conditional on the support of developed countries.
  • At the same time, considering the urgency to address climate change, it would come as no surprise that developed countries would mount pressure on developing ones to undertake necessary steps to address the issue.
  • Negotiations over the years have pointed out that issue critical more to developing countries, in adapting means of support, adaptation, loss and damage and agriculture.
  • However, this would be against the very foundation of the UNFCCC, which mandates developed countries to take up responsibility to address climate change, and at the same time, support developing countries in their domestic efforts to address climate change.

Way ahead

  • Considering the nature of climate negotiations and the behaviour of developed countries reflected in their extreme reluctance on increasing their climate ambitions or the support to developing countries, it would be interesting to watch how the negotiations unfold in Bonn.

Question How developing countries can take a lead to forge an alliance to pressurise developed nations such as USA to contribute responsibly for Climate change fight?

Explained

4.Japan to change its Pacifist Constitution (GS paper II)

Introduction

  • For the first time, Japanese PM, Shinzo Abe has put a clear time frame on revising the constitution, which contains language that bans Japan from maintaining armed forces.
  • Japan’s current constitution came into effect in 1947 after its defeat by allied forces in World War II. Article 9 of the document says that “land, sea and air forces, as well as other war potential will never be maintained.

Japanese Constitution

  • The current Constitution of Japan was promulgated on November 3, 1946, and came into effect on May 3, 1947.  One of the Constitution’s distinctive features is its embrace of pacifism.  Article 9 of the Constitution, which renounces war, is considered unique.
  • Japan is allowed the Jieitai, the Self-Defense Forces (SDF), which is comprised of the Air SDF, the Maritime SDF, and the Ground SDF.  These SDF components cannot be called land, sea, and air forces because article 9 prohibits Japan from maintaining military forces.
  • However, despite the names of the SDF components, many have argued that the SDF is in fact a military organization and that its existence is, in essence, unconstitutional. The government naturally interprets the Constitution differently, in a manner that validates the SDF.

 Current scenario 

  • The Liberal Democratic Party (LDP), which has been the ruling party for most of the period following World War II, has discussed amending the Constitution, especially article 9, but resistance has been strong.
  • It once looked impossible to amend article 9 because the majority of Japanese people would not support the amendment.  However, global political and security issues impacting Japan have changed, as have the viewpoints of the Japanese people.  There now appears to be realistic opportunities to amend article 9.
  • The 1954 Mutual Defence Assistance Agreement between Tokyo and Washington assured Japan external protection in exchange for the installation of permanent U.S. military bases in the country. The quid pro quo could hardly have been an antidote against an assertive nationalism following Japan’s economic and industrial triumph through the decades.
  • Abe would hope that the proposed amendment would combine the piecemeal measures of the past and reorient the Constitution to the current geopolitical realities. But it will require a two-thirds backing in both Houses of Parliament and also a simple majority in a popular referendum.

Question What are the proposed changes that Japan may conclude to change its constitution. What are the bones of contention in present regime?

Previous Post
Next Post

admin