Daily PIB Analysis For UPSC/IAS | Free PDF Download -19th September 2018 -

Table of Contents

RECP

- A trade war is going on between USA and China.
- 2 largest economies of the world battling against each other is a matter of concern for the whole world.
- The multilateral trade regime which saw trade flourish for 70 years following the Second World War faces an existential threat today.
- Medium run: regional trade agreements is the best option we have.
- Important point: all major nations with bargaining power negotiate hard to maximise access for their exports in return for the access they give to imports in their markets.
- Conventionally, negotiators view imports as a cost and exports as a benefit.
- No nation would export its products to another nation if they did not allow it to import something more valuable in return.
- As Nobel laureate Milton Friedman once said, we can eat imports but not exports. Once shipped out, exports are no longer available to us.

Regional Comprehensive Economic Partnership (RCEP) agreement among its 16 partner countries.
It encompasses about 40% of global GDP and over 42% of the world’s population.
One particular import-related fear that has shaped the actions of our RCEP negotiators is the prospect of an already large trade deficit with China turning yet larger.
It is a good negotiating tactic to use this bilateral trade deficit as a bargaining chip to maximise access for our exports to the Chinese market.
But it is not good economics to let this fear determine the fate of the negotiations.
We have to understand the difference between

While there are good reasons for a country to care about its overall balance of trade in goods and services, the same is not true of bilateral trade deficit.
A country must sell its exports to trading partners that offer it the highest prices for those exports. And it should buy its imports from partners that charge the lowest prices for them.
India maintains a healthy overall trade balance and thus avoids accumulating unduly large foreign currency debt.
India must also pay particular attention to the benefits it can reap from membership in RCEP through a large-scale movement of multinational enterprises.
It is a reasonable expectation that its large domestic market, large pool of labour and relatively low wages would combine to make India a progressively attractive production base for multinational enterprises.
Membership in the large RCEP market would multiply this attractiveness manifold for two reasons.

1. The membership will give multinationals locating in India tariff-free access to the vast RCEP market.

Movement of inputs without tariffs and other frictions across borders of sixteen member countries would make the multinationals doubly competitive.

Such movement is especially important in modern times because supply chain management requires inputs to cross international borders multiple times before being assembled into the final product.
If tariff and friction characterise each crossing, costs multiply.
India has made services liberalisation and freer movement of information technology workers a make or break issue.
While India has strength in these areas, it must take 2 qualifications into consideration.

Our success in services exports to RCEP markets is likely to be limited due to language and cultural barriers that a free trade agreement cannot overcome.
Preoccupation with services and freer movement of workers can result in underestimation of benefits India stands to reap in manufactures.

Given where India stands today in terms of its large pool of labour, low wages and reformed policy regime, past history is a poor guide to its future success in employment intensive manufactures.
With half of India’s farms less than half hectare in size, many of its farmers need decent jobs to escape poverty.
Historically, labour intensive manufactures have been the principal engine of growth in such jobs in every successful country. RCEP offers India the same opportunity.
With a population of 3.5 billion, the volume of shirts, blouses, trousers, accessories, towels, bed sheets and pillowcases that RCEP membership would buy in the next several decades is beyond measure.

Union Cabinet today approved an ordinance making triple talaq a punishable offence.
Law Minister Ravi Shankar Prasad said, the Supreme Court had in a verdict in August last year declared it illegal and unconstitutional.
He said, the triple talaq bill was cleared by the Lok Sabha but was stuck in the Rajya Sabha. The Minister said, Government tried to take the opposition along but the Congress did not come forward. “

CCEA today approved financial assistance of 3466 crore rupees for repair and safety of 198 dams in the country.
Cabinet has also approved 2,005 kilometre Indore-Budhni new railway line with an investment of over 3,200 crore rupees.
In other decisions the CCEA gave its nod to Talcher fertiliser factory in Odisha with an equity infusion at over one thousand crore rupees.
Cabinet has also approved extension of time line for implementation of the special package under Deendayal Antyodaya Yojana – National Rural Livelihoods Mission for Jammu and Kashmir for another period of one year during 2018-19.
CCEA also gave ex-post facto approval to ASHA Benefit Package from next month with two components.

Prime Minister Narendra Modi and Afghanistan President Ashraf Ghani held talks in New Delhi.
The two leaders discussed issues related to bilateral ties and also matters concerning regional security. • Mr Ghani arrived in the national capital this morning on a day-long visit to India.
Minister for Housing and Urban Affairs Hardeep Singh Puri received the visiting dignitary at the airport. India Foundation will also host a civic reception for the visiting dignitary.
The visit is considered significant in more ways than one as it is coming within days of Pakistan Foreign Minister visiting Afghanistan and holding crucial talks.

Vice President M Venkaiah Naidu and Romanian President Klaus Werner Lohannis held delegation level talks at the Presidential Palace in Bucharest today to further strengthen the bilateral relations.
Mr Naidu also called on the President of Chamber of Deputies of Romania, Liviu Dragnea.
India and Romania signed a Memorandum of Understanding in the field of Petroleum and Gas
Mr Naidu said, ties between India and Romania are historic, warm and friendly.

I am pleased to visit this beautiful country on the occasion of 70th anniversary of our strong diplomatic relations. I convey the wishes of 1.3 billion people of the republic of India to the people of Romania for our centenary year celebrations.
My visit reflects our desire to strengthen our collaboration, shared commitment to bolster our friendship and diversify our ties.

North Korean leader Kim Jong Un and South Korean President Moon Jae-in signed an agreement today on denuclearisation and reducing military tensions on the peninsula.
The agreements were inked after the two leaders held summit talks in Pyongyang.
South Korean President said, the North Korean leader agreed to permanently dismantle country’s largest nuclear facility in Yongbyon, if the US takes corresponding measures.
Mr Moon said, North also agreed to permanently close a missile engine testing site and launch facility in Tongchang-ri under the supervision of international experts.
The North Korean leader also pledged to visit Seoul, the first visit by a North Korean leader to the South since the Korean War
South Korean President said, the complete denuclearisation of the Korean peninsula will happen in the near future. He also expressed hope that the talks between North Korea and the US will be revived as soon as possible.