TPP

Handing out a lifeline

If you thought that months after the US pulled out from the TPP, the ambitious trade deal had no chance of revival, you would be wrong. The agreement is getting a new lease of life, and that too for the second time in the last four months. Although over the last few months some countries have been discussing regional deals similar to the TPP, steps towards a full-scale revival of the deal have also taken place. Officials from 11 member countries recently met in Sydney for a three-day meeting to discuss the possibility of amendments to the TPP. Trade ministers from TPP group will present their proposal for the future of the deal to leaders at the APEC summit in Da Nang, Vietnam in November.

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Japan-UK

Planning for tomorrow

The British Prime Minister has had a rough couple of months. Theresa May has been taking fire from EU officials, Remainers, and even her own party. Under this immense pressure, May continues her search for economic allies with a steely resolve. Her latest ray of hope, Japan. While her latest trip to Japan did not succeed in concluding a trade deal, reports hint that the Asian giant and UK are all set to sign an FTA, almost immediately after Brexit is finalised.

Expectations were high when May made a visit to Japan, in August. She is reported to be pushing for an FTA similar to the EU-Japan FTA. A move that she hopes to replicate in most countries that have an FTA with EU.

Theresa May I Prime Minister of UK

 

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BRICS Summit

Are we moving ahead?

The situation in Doklam was defused just in time for the Indian Prime Minister Narendra Modi to attend the 9th Annual BRICS Summit that was hosted by China early last month. The conclave, attended by the five member nations – Brazil, Russia, India, China and South Africa, aims to strengthen cooperation and trade between the countries. This edition of the international trade summit comes at an important juncture in the China-India trade relationship. China has been aggressively pursuing its One Belt One Road (OBOR) initiative in a bid to become the world’s next superpower. India, which also aspires for the same position, regards OBOR as a threat to its economy and sovereignty. Having been at loggerheads over these projects for months, the summit presented the perfect opportunity to mend bridges.

As a part of the Summit, the five nations signed four agreements, namely the BRICS Action Agenda on Economic and Trade Cooperation, BRICS Action Plan for Innovation Cooperation, an MoU between the BRICS Council and the New Development Bank on Strategic Cooperation and a Strategic Framework of BRICS Customs Cooperation. They also discussed the issues of security and terrorism. Interestingly, for the first time, China acknowledged the violence caused by Pakistan-based terror groups LeT and JeM. This was a victory for India, even if only a symbolic one.

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Australia-Peru

Exploring alternatives

The South American nation of Peru is taking its first steps towards an ambitious trade deal with Australia. The deal covers goods, services, and investments. The first round of negotiations took place in June. Another set of negotiations was held in late August. Leaders of both countries are hoping to reach an early agreement. They hope to bring it into effect sometime in 2018.



While Australia has not been by any means a major trade partner for Peru [it is currently in 25th place], both countries have been working towards strengthening trade partnerships in the region for some time. Both have also been trying to diversify their traditional export basket. Australia and Peru, who are signatories to stalled TPP, are hopeful that agreements like this will help tackle tariff and non-tariff barriers across the region and nullify the impact of US’s decision to withdraw from TPP.

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Myanmar

A friendly neighbour

India is taking steps towards strengthening its relationship with neighbouring countries through various routes, including hydrocarbon exports. The first ever delivery of high-speed diesel (HSD) to Myanmar was made by Numaligarh Refinery Limited to Myanmar’s Parami Energy Group. early last month. This trial consignment weighed 40 kilolitres. Numaligarh Refinery is expected to export around 5,000 MT of HSD per month to Myanmar. India is also looking to export gas directly to Myanmar through a proposed tri-nation pipeline between India, Myanmar, and Bangladesh.

According to an ICRA report, Indian diesel exports have increased in the first nine months of FY2017. India hopes that the success of this trial consignment could open the doors for increasing its petroleum exports and expanding its reach to its neighbouring countries.

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India-China

Strange frenemies

It is not every day that India and China take a stand together. So when they do, it must be something of utmost importance. The nations submitted a joint proposal to the WTO against the ‘trade-distorting practices’ of developed countries like UK and US. The proposal counters the efforts by some countries to target the subsidies of the developing countries while letting the developed countries retain their huge farm subsidies. Is it really too much to ask for a level playing field? Let’s hope the two Asian giants can force the issue.

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India-Japan

Making new friends

While the recent BRICS Summit saw India and China stepping back (temporarily?) from their feud, Indian PM Narendra Modi has been quick to cosy up with another Asian giant – Japan. The recent visit by Japanese Prime Minister Shinzo Abe to Gujarat is being talked about in the media as India’s move to strengthen an alternative alliance. India hopes to counter growing China-Pakistan relations with its own friend in high places.

The visit, on the occasion of the Indo-Japan Summit, saw the two nations sign 15 deals covering key areas like disaster risk management, North-East connectivity, skill development, civil aviation, infrastructure development and sports.

The announcement that generated the most hubbub was of the construction of a bullet train between Gujarat and Maharashtra. The 508-km-long Mumbai-Ahmedabad High-Speed Rail project is estimated to cost around Rs 1.1 lakh crore with Japan loaning India almost 81% of the amount at a 0.1% interest rate, to be paid back over the next 50 years.

The project is expected to be up and running by 2022. Apart from this, India also hopes to set up six additional bullet train corridors in the near future.

While India and Japan’s trade has been on the downward trend over the last few years, Japanese FDI in India has been growing. To date, around $25.7 billion worth of FDI inflow has been seen, which the Modi-led government hopes to further increase with the latest round of MoUs and agreements.

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Demonetisation

An exercise in futility?

Was it worth the effort? That is what everyone is asking. The latest RBI Annual Report has been the cause of many discussions and deliberations. According to the report, approximately 99% of the demonetised currency has been returned to the banks. Prompting people to ask if only a tawdry 1% of India’s cash was ill-gotten. Critics are of the opinion that the entire exercise has done nothing more than help convert black money into legal tender.

During the launch of the initiative, the government had stated that the move would help tackle the issue of illegal money and undeclared income. With nearly all of the money being returned, people are questioning not only the implementation but even the raison d’etre of the initiative. The move has detrimentally impacted the economy and led to many people losing their jobs. It has also cost the RBI a massive Rs.7,965 crore to print new notes. While India’s economy and is expected to slowly regain its original strength, critics continue to express concern about government’s tendency of rolling out half-baked initiatives.