8/8/2019 Impact of Trade Policies on the Rural by Hemant K Batra

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8/8/2019 Impact of Trade Policies on the Rural by Hemant K Batra

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services, mutual recognition of standards & laboratories, trade facilitation, harmonisation ofcustoms procedures etc. The most sophisticated FTAs/RTAs go beyond traditional trade policymechanisms, to include regional rules on investment, competition, environment and labour.

Developing countries often find it beneficial to participate in regionalism for the followingreasons: (1) upgrade production techniques and standards; (2) expand import and export

markets; (3) develop the capacity to compete; (4) broaden investment prospects; (5) improveconsumer welfare; and (6) prevent the adoption of, or cope successfully with, unilateralmeasures.

Focus must be given to those countries, which have grown under the auspices of agriculture.India and china have always been agricultural countries, such countries no matter what, cannotbecome industrialized so easily. Agriculture is the essence of these countries and its necessityruns in its veins. There is wide agreement that trade liberalisation has contributed significantly toglobal economic growth over the past two decades, there is a need to assess the extent towhich the poor are benefiting from this growth in different countries and sectors. An UNCTADIndia report states that, poverty reduction has become the litmus test for positive developmentimpacts of trade liberalisation and for it to be seen as benign and therefore justified not only in

efficiency but also welfare terms. A deduction that one can safely make is that during the 1990strade liberalisation policy that India followed, led to a reduction in the percentage of people livingbelow poverty. There were no such steps that were taken particularly for poverty alleviation assuch during the late 1990s, so it can be deduced that liberalization, and regionalism had a partto play in this reduction. The various regions started consolidating trade which has led toincrease in industrial development, infrastructure and raised the forex reserves. As a result ofthis a lot of funds were gathered that were channelised towards rural development and raisingthe standard of living of the poor. Due to the immense labour potential in such countries, likeIndia and China who truly have come a long was from being a purely agricultural country,numerous other countries have been attracted to the prospects that these countries promise. Sothe other more developed countries have felt the freedom to invest by way of trade. This will inturn reduce the growing numbers i.e. there will be a reduction in growth rate and the unexploited

underdeveloped countries will be fully made use of. This I believe can only be achieved when acountry is not developed, because it will not be feasible to develop an already developedcountry.

Coming to the demographic reports, although, the net addition in population during each decadehas increased consistently, the change in net addition has shown a steady declining trendespecially during the decade 1991to 2001. [A swooping 27.9 million more people were addedbetween the decades 1981-1991, this was drastically reduced to 17.6 million for the decades1991-2001. This implies although India continues to grow in size, its pace of net addition is onthe decrease. Here too no measures were as such taken specifically to reduce the populationgrowth, but it had declined that too in the decade were liberalization was adopted for the firsttime].

Also one of the primary reasons for the increase in the regional Free Trade Agreements is thatregionalism and regional FTAs are the only path available for many developing countries tointegrate into the world economy, as the best way to learn to compete is by competing. Initialcompetition between neighboring states that understand the needs of weaker states leads tostrengthening of the economies of the weaker states so as to be able to face global competition.

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We must realise the importance of being a member of the WTO and how working inconsonance with its rules and regulations will benefit us. The WTO agreements are the legalground rules for international commerce. Essentially, they are contracts, guaranteeingmember countries important trade rights. They also bind governments to keep their tradepolicies within agreed limits to everybodys benefit. The agreements were negotiated and signedby governments. But their purpose is to help producers of goods and services, exporters, and

importers conduct their business. The goal is to improve the welfare of the peoples of themember countries. The WTOs rules-the agreements-are the result of negotiations betweenmembers. Through these agreements, WTO members operate a non-discriminatory tradingsystem that spells out their rights and their obligations. The vast majority of WTO members areparty to one or more regional trade agreements. The rush of RTAs has continued unabatedsince the early 1990s. This is the period where Indias economy reflected a liberalized policy,the same policy, which resulted in a reduction in poverty. For weak economies the pooling ofregional resources such as land, livestock and agricultural products and development of intra-regional trade is the only practical method for building the required capacity. A higher level ofcooperation would enable countries in a region to cope with development problems and with acomplex business environment. The restructuring of productive sectors would be more feasibleon a regional than on a national basis.

Regional trade agreements, could serve as a stepping-stone towards multilateral tradeagreements. Regional trade agreements must maintain and strengthen momentum towardsglobal economic integration.

By Hemant Batra, Lead Partner, Kaden Boriss Legal LLP, India; Vice President, SAARCLAW;

Chairperson, IICLAM, Singapore; Advisory Board Member, OIC, USA