The US and 11 trading partners across the Pacific Rim have announced a landmark trade deal that will link 40 per cent of the global economy. The agreement on the Trans-Pacific Partnership (TPP) -- which comprise Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, United States, and Vietnam -- was announced on Monday and will be the world's largest regional trade pact.
The TPP will be the biggest trade agreement struck since the 1994 completion of the Uruguay Round, which created the World Trade Organization (WTO), and does not include China and India, two of the largest economies. The TPP is likely to have an adverse effect on India's textile and apparel exports, among other sectors.
The text of the agreement has not yet been released, fuelling speculation on various aspects of the deal. The negotiations had been shrouded in secrecy and had caused a stir after Wikileaks had on at least two occasions published extracts from the ongoing parleys. The TPP has come in for trenchant criticism from various sections of society in almost all the participating countries.
The Office of the US Trade Representative claimed in a statement that the TPP will eliminate or reduce "tariff and non-tariff barriers across substantially all trade in goods and services and covers the full spectrum of trade, including goods and services trade and investment, so as to create new opportunities and benefits for our businesses, workers, and consumers."
The TPP includes 30 chapters covering trade and trade-related issues, beginning with trade in goods and continuing through customs and trade facilitation; technical barriers to trade; trade remedies; intellectual property; labour; environment; etc. There are two sections that India would like to examine closely once the details of the deal are released: 'textiles and apparel' and 'rules of origin'.
The 12 member countries have agreed to eliminate tariffs on textiles and apparel, industries which are important contributors to economic growth in several TPP Parties’ markets. According to the statement, most tariffs will be eliminated immediately, although tariffs on some "sensitive" products will be eliminated over longer timeframes.
The textiles and apparel chapter also includes specific rules of origin that require use of yarns and fabrics from the region comprising the TPP countries, which will promote regional supply chains and investment in this sector, with a “short supply list” mechanism that allows use of certain yarns and fabrics not widely available in the region.
Moreover, there would be commitments on "customs cooperation and enforcement to prevent duty evasion, smuggling and fraud, as well as a textile-specific special safeguard to respond to serious damage or the threat of serious damage to domestic industry in the event of a sudden surge in imports."
The Indian textiles and apparel industry will be keen on knowing the details of the relevant chapter, especially in the backdrop of the one on 'rules of origin' which may adversely affect its equations with Vietnam.
By Subir Ghosh