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HomeOpinionNarendra Modi rejecting RCEP shows Swadeshis and Left think alike on trade

Narendra Modi rejecting RCEP shows Swadeshis and Left think alike on trade

If growth in India’s manufacturing and farming sectors has stagnated, it is because successive governments have failed to go for bold reforms.

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Prime Minister Narendra Modi’s decision to walk out of the Regional Comprehensive Economic Partnership Monday once again proves that when it comes to trade, the extreme Right and the extreme Left think alike.

India’s eleventh-hour move to say no to the mega trade pact at the third Regional Comprehensive Economic Partnership (RCEP) Summit in Bangkok has an eerie resemblance to the extreme Left rejecting the creation of the World Trade Organisation (WTO) from the erstwhile General Agreement on Tariffs and Trade (GATT) in 1990s.

The Right is doing exactly what the Left had done some three decades ago. The Left had predicted the crash of the Indian economy in the early 1990s. The lobby and interest groups that are praising the Modi government for the ‘wise move’ have little understanding of the fact that trade and foreign policy always go hand-in-hand.


Also read: Modi’s RCEP move shows sound political judgement. Don’t scoff, it’s rare these days


What history tells us 

From the ancient Chinese silk route to the British East India Company, history has shown us how enhancing trade ties and making it the pivot of foreign policy have helped countries expand their reach and influence. Such countries have developed their domestic economy by pushing growth in the manufacturing sector, which in turn has led to creation of jobs.

WTO deputy director-general and leading international trade lawyer Alan Wolff writes in Paradigm Lost? US Trade Policy as an Instrument of Foreign Policy’: “Trade was central to the reconstruction of Europe under the Marshall Plan, and as a bulwark against the spread of communism and Soviet influence.”

Wolff says that China even used military power to “maintain the Silk Road for its value for trade”. “Fair and reciprocal trade, investments, and exchanges of knowledge deepen our alliances and partnerships, which are necessary to succeed in today’s competitive geopolitical environment,” he argues.

Left & Right protest 

Not just the Left, the RSS-affiliated organisations too had expressed their discontent over globalisation and foreign direct investment (FDI) in the early 1990s. The Swadeshi Jagran Manch (SJM), launched in 1991, opposed India’s membership to the WTO during the Narasimha Rao government.

The Swadeshi Jagran Manch had then feared that such a move would “compromise swadeshi principles of economic self-reliance and expose Indian industries to unmanageable competition,” writes political scientist and professor of political science at University of Pennsylvania Francine R. Frankel in India’s Political Economy 1947-2008.

The Left Front had vehemently protested against economic policies of Rao, who had Manmohan Singh as the finance minister. It even took out a rally at India Gate, notes Sanjaya Baru in 1991: How P.V. Narasimha Rao Made History.


Also read: India stayed out of RCEP because it couldn’t risk another China-dominated ASEAN


Don’t blame trade

Nearly three decades later, WTO has helped shape India’s foreign trade policy while bringing competitiveness in its domestic industry. All this, while the farm sector has been shielded from the challenge against food subsidies through legal recourse under WTO’s Dispute Settlement Body.

If growth in India’s manufacturing industry and farming sector has stagnated today, it is because successive governments in New Delhi have failed to go for bold reforms. Trade policy alone can’t be held responsible for the current crisis in the Indian economy.

New Delhi’s rejection of RCEP by invoking Gandhi’s talisman does nothing, it only exposes some inherent weaknesses in the Indian economy.

Just to quote some basic numbers without going into any hair-splitting analysis: industrial growth shrunk 1.1 per cent in August due to poor performance of the manufacturing, power generation and mining sectors, merchandise exports contracted 2.39 per cent between April and September while growth in eight core sectors (coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity) contracted 5.2 per cent in September, the sharpest fall in last 14 years.

Needless to say, this has not happened due to trade. In fact, ever since it came to power in May 2014, the Modi government has been extremely protectionist, hiking tariffs across all products, which has even irked its favourite ally America.


Also read: Modi’s Trump-like exit from RCEP trade deal is a tactical retreat for India


 

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4 COMMENTS

  1. When it comes to economic policy there is no left and right in India. The last genuineness reformist right wing party was the Swatantra party. BJP and Congress did turn rightward under PVNR and ABV. Now with Sonia, Rahul and the NAC in Congress and the BJP and it’s SJM, we are back to failed socialist policies. Not surprisingly both agree that India must not join the RCEP.

  2. Singapore’s PM Lee said it is “ a pity “ that India has chosen not to join the RCEP. From his father’s time, Singapore has seen India as a friend, a force for balance and stability in the region, a country with enormous potential and promise. Democracies are more messy, creating consensus takes more effort and time, but when the imperative of removal of mass poverty is so great, nations find the will and the way. Hum nahin kar pa rane. Don’t expect any 21 gun salutes from ASEAN and points further east.

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