Transparency in FTA negotiations

(MainsGS2:Effect of policies and politics of developed and developing countries on India’s interests, Indian diaspora.)

Context:

• India is negotiating FTAs with countries such as the European Union, Canada, the U.K., and Israel to achieve the export target of $2 trillion by 2030.

Far-reaching impact:

• These FTAs cover a wide array of topics such as tariff reduction impacting the entire manufacturing and the agricultural sector; rules on services trade; digital issues such as data localisation; intellectual property rights that may have an impact on the accessibility of drugs; and investment promotion, facilitation, and protection.
• Consequently, an FTA has a far-reaching impact on the economy and society, thus, transparency and greater scrutiny of the FTA process both during and after the negotiations is required.
• For example,iIn the U.K., there are several robust mechanisms that foster a certain degree of transparency in the FTA negotiations.
• Furthermore, there are institutional apparatuses that enable the scrutiny of the actions of the executive, during and after the signing of the FTA.

Case study of U.K.:

• The Department of International Trade (DFIT), U.K., publishes a policy paper laying down the strategic objectives behind negotiating an FTA and why it is important for the U.K. to have an FTA with a particular country.
• This policy paper is fairly detailed listing the specific advantages of signing an FTA such as the economic gains expected, distributional impacts, the environmental impact, and the labour and human rights dimensions of the FTA.
• The policy paper that the DFIT publishes also contains the inputs and responses received by various stakeholders such as businesses, non-governmental organizations and Furthermore, the policy paper also explains the government view on specific suggestions.
• In the U.K., the strategic objectives identified by the government for signing an FTA are scrutinised by the U.K. Parliament through the International Agreements Committee (IAC).
• The IAC hears expert witnesses on the FTA, critically examines the government’s strategic objectives for each FTA under negotiation, and offers key recommendations wherever it finds gaps in the government’s approach.
• In the U.K, under the Constitutional Reform and Governance Act, 2010, the executive has to lay down a treaty before the British Parliament for 21 sitting days with an explanatory memorandum before ratifying it.

India lacks mechanism:

• India’s parliamentary system allows for department-related parliamentary committees that discuss various topics of importance and offer recommendations.
• However, the Parliamentary Standing Committee on Commerce (PSCC) rarely scrutinises the Indian government’s objectives behind negotiating and signing an FTA.
• In India, there is no mechanism for any role of Parliament in the ratification of treaties including FTAs.
• Entering into treaties and matters incidental to it such as negotiations, signing and ratification are within the constitutional competence of Parliament.
• But, Parliament in the last seven-plus decades has not exercised its power on this issue, thus giving the executive unfettered freedom in negotiating, signing, and ratifying treaties including FTAs.

Way forward:

• The executive should make a clear economic case outlining its strategic objectives publicly for entering into negotiations for a treaty such as an FTA.
• The executive should be under an obligation to consult all stakeholders, respond to their concerns and make this information publicly available.
• The Indian Parliament should constitute a committee on the lines of the U.K.’s IAC that will scrutinize the strategic objectives behind entering into an FTA.
• The executive should place the FTA on the floor of Parliament for a certain duration, allowing Parliament to debate it, before ratifying it.

Conclusion:

• While the executive’s constitutional prerogative of entering into an FTA or international treaties, in general, is indisputable, this power should be exercised in a manner that makes the executive answerable.