India is negotiating FTAs with countries such as the European Union, Canada, the UK and Israel. file | Photo credit: The Hindu
To achieve the export target of $2 trillion by 2030, India is pushing for Free Trade Agreements (FTAs). India is negotiating FTAs with countries such as the European Union, Canada, the UK and Israel. These FTAs cover a wide range of topics such as how tariff cuts impact the entire manufacturing and agriculture sectors; Rules on Trade in Services; digital issues such as data localisation; intellectual property rights that may have an impact on access to medicines; and Investment Promotion, Facilitation and Protection. As a result, an FTA has far-reaching effects on the economy and society. Given this, there is a legitimate expectation of transparency and greater scrutiny of the FTA process during and after negotiations.
But India negotiates most FTAs behind closed doors, with little knowledge of the objectives and procedures and negligible scrutiny. This is not the case with other countries with whom India is negotiating such FTAs. In the UK, for example, there are a number of robust mechanisms that promote some degree of transparency in FTA negotiations. In addition, there are institutional instruments capable of scrutinizing the actions of the executive during and after the signing of FTAs. Let us look at these mechanisms.
FTA negotiations in the UK
Firstly, the Department for International Trade (DFIT), UK, publishes a policy paper setting out the strategic objectives behind negotiating an FTA and why it is important for the UK to have an FTA with a particular country. This policy paper lists in great detail the specific benefits of signing the FTA, such as the expected economic benefits, distributional impacts, environmental impacts, and the labor and human rights dimensions of the FTA. In India, no such document is publicly produced that makes the case for signing the FTA and assesses its impact on the environment and society at large. The commerce ministry – the nodal body dealing with FTAs – provides minimal information about FTA negotiations on its website.
Second, the policy paper to be published by DFIT also includes inputs and feedback received from various stakeholders such as businesses, NGOs and others. In addition, the policy paper also clarifies the government’s stand on specific suggestions. The commerce ministry also appears to hold stakeholder consultations and inter-ministerial meetings but there is no public record of these discussions and no government response to stakeholder concerns.
Third, in the UK, the strategic objectives identified by the government for signing the FTA are scrutinized by the UK Parliament. This task is performed by the International Settlement Committee (IAC) of the British Parliament. The IAC hears expert witnesses on FTAs, critically examines the government’s strategic objectives for each FTA under negotiation, and makes key recommendations where it finds differences in government approach. The UK Government then responds to these recommendations. In India, there is no mechanism for such parliamentary scrutiny of the actions of the executive during FTA negotiations. India’s parliamentary system allows for department-related parliamentary committees that discuss various subjects of importance and make recommendations. However, the Parliamentary Standing Committee on Commerce (PSCC) rarely examines the Indian government’s motives behind negotiating and signing FTAs.
Fourth, in the UK, under the Constitutional Reform and Governance Act, 2010, the executive has 21 days to ratify a treaty with an explanatory memorandum before the British Parliament. It allows Parliament to inform it of the treaty that the executive is going to ratify. In India, there is no mechanism for any role of Parliament in ratification of treaties including FTAs. The making of treaties and matters connected therewith such as negotiation, signing and ratification are within the constitutional competence of the Parliament. But, in the last more than seven decades, Parliament has not exercised its power on this issue, thus giving unfettered freedom to the executive to negotiate, sign and ratify treaties, including FTAs.
India should learn from UK’s book and develop a law for entering into treaties including FTAs. This law should have the following parts. First, the executive must make a clear economic case publicly outlining its strategic objectives for entering negotiations for an FTA-like treaty. Second, the executive must have an obligation to consult all stakeholders, respond to their concerns, and make this information publicly available. Third, the Indian Parliament should set up a committee on the lines of the UK’s IAC to examine the strategic objectives behind entering into the FTA. Fourth, the executive must table the FTA for a specified period of time, allowing parliament to debate it before ratifying it. While the constitutional prerogative of the executive to enter into FTAs or international treaties, in general, is unquestionable, this power must be exercised in a manner that holds the executive accountable. After all, an integral aspect of democracy is holding the executive accountable for its actions. This should be no different to the negotiation of international treaties including FTAs.