Why all our political parties favour trade blocks over trade blocs

Anyone even minimally familiar with the inner workings of India’s political system would have known that the country’s opting to stay out of the proposed 16-member Regional Comprehensive Economic Partnership was a foregone conclusion.

In his formal statement confirming that India would not join China-backed trade bloc, which besides the Asean countries includes Australia and New Zealand, Prime Minister Narendra Modi said that “Gandhiji’s talisman and my own conscience” would not permit him to agree to become a part of the multinational association unless the interests of all the various Indian stakeholders were adequately protected, which right now was not the case.

So who are these stakeholders, and what are their interests which need protecting?

Indian industry is a major stakeholder, and it is in its interest that the government of the day – whatever it be – protect it from aggressively exporting countries, like China, making inroads into its captive domestic market.

India’s organised agricultural sector as represented by farm and dairy cooperatives, food regulating and procurement agencies, and the mandis which control the prices of grains, fruits, and vegetables, is another stakeholder whose interests are to be protected from cheap imports which would drive down prices within the country.

A spokesperson for a dairy cooperative has gone on record to say that if milk from New Zealand were to be made freely available in India, its purchase price would come down from 31 rupees a litre to Rs 10 a litre.

Even as the BJP-led NDA government has hailed the rejection of the RCEP as a great victory for the `national interest’, the Opposition, led by the Congress, has crowed that it forced the government into opting out of the trade bloc.

What is this `national interest’ which all our political parties, across the board, are so keen on protecting and which makes all of them favour trade blocks as opposed to trade blocs?

Even before Indira Gandhi’s `licence raj’, there has been a form of crony, or collusive, capitalism by which the government of the day protects the interests of organised industry and agriculture from foreign competition in return for political funding in the form of cash or electoral vote banks, such as farmers’ lobbies.

Trade blocs, which would lift barriers to a freer flow of goods and services, would compel India’s industry and agriculture to be more competitive, more innovative in value addition, and more efficient in performance in order to match up to cheaper, better imports.

This would be in the national interest of consumers of all products and services, from automobiles to apples, from medicare to milk.

But then, unlike organised industry and organised agriculture, consumers don’t have an organised  lobby through which to induce political parties to lift blocks to trade blocs.

Consumers’ interests have no stake in the `nation’s interest’.

Some nation, some interest.

DISCLAIMER : Views expressed above are the author’s own.

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