Piyush Goyal the reformer shines through in India-UAE CEPA and other complex trade pacts

An overriding issue in relations between and among countries is about navigating through the high waves of strategic interests and striking an equilibrium on mutual economic benefits. The India-United Arab Emirates (UAE) comprehensive economic partnership agreement (CEPA) needs to be seen in this context.

"The deal is done! Signed the pathbreaking #IndiaUAECEPA along with the UAE Minister of Economy HE Abdulla bin Touq Al Marri. The sky is the limit for our trade and economic ties as we commit to building a shared future and enhancing the prosperity of our people," Union Minister of Commerce and Industry Piyush Goyal said on February 18, after the signing of India-UAE CEPA.

Inter-country economic cooperation agreements are one of the complex pieces of policy making and reforms. The gains of such treaties, as it were, may not be visible in the immediate context, but last for decades.

To that extent, the India-UAE CEPA will, perhaps, go down as a standout milestone in India’s efforts, shepherded painstakingly by Goyal over several years, towards inking mutually beneficial global economic integration pacts.

Multi and bi-lateral CEPAs and free trade agreements (FTAs) are akin to the hour hand of a clock that you rarely see moving. Each piece of structural adjustment faces its own dynamic of resistance, pacing out its passage through strategic and economic stakeholders of each country.

There is no gainsaying the power of international trade as an engine of growth. What, however, is critical is the implications of optimal mutual dependency and collective self-reliance that act as growth multipliers.

That is why, Goyal’s efforts at meticulously running through each detail with a fine tooth-comb in all the economic integration agreements that India is negotiating needs commendation. The India-UAE CEPA is not just about the UAE, but also about the region that opens up a gate of opportunities for connecting India on the supply chain to the African continent.

The Gulf Cooperation Council (GCC) has approached New Delhi to begin negotiations for a bilateral trade agreement on behalf of the grouping. Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE are part of the GCC.

India has FTAs with six countries bilaterally and 18 countries multilaterally — 11 member-countries of the Association of South-East Asian Nations (ASEAN) and seven of the South Asia Free Trade Agreement. Five more are under discussion; these include bilateral deals with Australia, the UK, the US and Canada and a multilateral arrangement with the European Union, which has 27 members. Negotiations with Russia-led Eurasian Economic Union (EAEU) that includes Armenia, Belarus, Kazakhstan, and Kyrgyzstan, besides Russia, are also expected to start soon.

Trade analysts, who did not want to be named, said that Goyal’s personal rapport with trade ministers from various countries comes into play in bolstering the cause of India’s stakeholders, helping iron rough edges that sometimes can remain unresolved for years.

The ongoing negotiations on the India and Australia trade pact is a case in point. India will be finalising a mini-FTA in March. The limited trade deal called the 'early harvest agreement’, is expected to cover a wide range of sectors such as textiles, pharma, health, education, renewables, and gems and jewellery.

Goyal has himself personally hammered out most of the tricky and potential sticking points on the mini-FTA during his talks earlier this month with his Australian counterpart Dan Tehan.

Similarly, India and the UK are aiming for an interim agreement by April and subsequently a comprehensive deal by the end of the year. The first round of negotiations were completed earlier this month and the second round is scheduled for March 7-18.

Trade agreements, particularly for a country such as India, need as much of domestic interest protection, as it is about giving Indian artisans, goods makers and service providers easier barrier-free access to overseas markets.

An FTA obligates signatory countries — bilaterally or multilaterally — to a set of mutually agreed conditions pertaining to trade in goods and services among them. Terms can include tariff levels, and removal of measures and provisions that act as trade barriers. In the contemporary world, such reforms are much beyond free trade goods. These are more about creating an economic union of sorts that will allow for free movement of factors of production — labour and capital mainly — and the coordination of economic policies among member countries.

Trade negotiations are substantially about expanding the area of the possible, and gradualism is a given approach. Seen through this lens, the pace at which Goyal has piloted these negotiations are nothing short of big-bang.