US for higher standards in trade deal, India resists

Last Updated: Saturday 04 July 2015

talks between India and the us for a Bilateral Investment Promotion and Protection Agreement (bipa) are now focused on two issuesenvironment and labour standards. The us wants to include in bipa, environment and labour standards, along the lines of the North American Free Trade Agreement (nafta). Resisting the move, India wants a bipa along the lines of the agreements it has with 63 countries.

Kamal Nath, union Minister of Commerce and Industry, said in April that he was still not clear if the issue would be taken up in the Doha round of trade negotiations in May. Speaking at a imf -World Bank board meeting on April 14, Finance Minister P Chidambaram said, It is important not to overload the agenda (of Doha round) or create fresh non-tariff barriers by introducing distracting labour standards and environmental issues, which must be addressed in a separate forum.

The Indian industry is not in favour of the standards. Any agreement that binds Indias policy space in these two areas will not be beneficial for industry. As long as both countries meet globally negotiated and accepted laws and standards on labour and environment, it should not be a problem, said Shruti Bhatia, director (North America), Confederation of Indian Industry. Increasing the scope of such agreements to include social issues may make the negotiations tedious and prolonged, she added.

Researchers say issuing such standards would defeat the purpose of trade agreements, which is to open barriers. In nafta, environment and labour concerns were afterthoughts and were included under pressure. India is not opposed to the standards but they should not be linked with trade agreements, said Aparna Sawhney, associate professor, International Studies at Centre for International Trade and Development, Jawaharlal Nehru University, Delhi.

Companies dealing with the us follow its norms. Making them mandatory for all will be difficult. Small or medium enterprises may not be able to follow them, said Arpita Mukherjee, senior fellow, Indian Council for Research on International Economic Relations, Delhi. But, she adds, We should study standards in developed countries and see whether we can learn anything from them before rejecting them outright.

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