Jared Kushner - Breaking History and a little bit of trade!

I generally don't blog about non-fiction books, but this one by Jared Kushner titled "Breaking History- A White House Memoir" was a delightful read for many reasons.

It gives an “outsider’s” perspective on administration. Talked about a lot of issues on foreign policy, but what caught my attention - you guessed right - was a couple of chapters on international trade!

The book is a great treat on deciphering how the USMCA negotiations unravelled between the United States, Mexico and Canada.

In the chapter titled "No One Gets Smarter by Talking", the author gives us the ring side view on "rules of origin" based negotiations and how a "little note" was instrumental in making it happen.

"The country's top trade diplomat studied the document, deciphering its scribbled numbers and arrows. Then he looked at me. "I have never before seen a trade agreement resolved on a three-by-five piece of paper," he said.

There are many nuances to a trade agreement being signed. The book gives an interesting insight to trade negotiators on how and what factors play a role. It is also a great lesson on negotiating tips - on how not to speak up first and lay your cards on the table!

I would definitely recommend this book to anyone interested in history, trade and much much more! A refreshingly unorthodox view of how some intractable problems of the world can be resolved. 

Where are you from dear "goods"?

"Rules of Origin" are an integral part of the legal trading architecture. Complex and diverse, it sure is a challenge to beginners. It asks the basic question - where are you from, dear goods?! I haven't blogged about this a lot and not an expert on this specialized area.

However came across this excellent guide in the context of Sweden on how rules of origin impact trade and volumes. Titled "Do Rules of Origin Rule Free Trade", this National Board of Trade Sweden publication is a must read for free trade agreement enthusiasts. 

Do the rules enhance trading volumes? Do they have any impact at all. The report attracted ny attention for the simplicity yet complex analysis of a difficult subject. Simple explanations are a sign of mastery over complex subjects. this sure was one for me.

Sample this by one of the authors Christopher Wingard:

Rules of origin establish if goods are eligible for preferential tariffs, by making sure that a sufficient amount of production is done within the FTA. By requiring that production takes place within the FTA, the rules of origin also close the door on goods coming from countries outside the free trade agreement. They are a necessary part of any free trade agreement that includes some form of tariff reduction.

The reports findings, inter alia:

There is a pattern of heterogeneity across the agreements. One rule that is associated with low preference utilisation in one agreement can be associated with high preference utilisation in another. This variation is probably because all trade agreements are negotiated based on the unique set of economic and political circumstances between the parties in question. Variation is in other words not a bug; it is a feature. 

Again, a classic example that what is written in the rule book may not play out the way it was intended to. Also how much trade agreements, like investment agreements, actually influence trading patterns is a moot question. This report is a step in finding solutions in that direction. 

Climate change and FTAs

Following on the EFTA-India TEPA posts, apart from investment promotion an interesting set of arguments on the labour provisions are found here in the IELP blog by Desiree LeClerco. 

As a continuation, let us look at the "Climate Change" provisions in the FTA.  A rarity in India's FTA, the provisions read as under:

Article. 11.5

 Climate Change 

1. The Parties recognise the importance of achieving the objectives and goals of the United Nations Framework Convention on Climate Change, done at New York on 09 May 1992 (hereinafter referred to as “UNFCCC”) and the Paris Agreement, done at Paris on 12 December 2015, in order to address the urgent threat of climate change, based on best available science and reflecting the principles of the UNFCCC and the Paris Agreement, including equity and the principle of common but differentiated responsibilities and respective capabilities, in light of different national circumstances. 

2. The Parties reaffirm their commitment to implement their respective obligations and commitments under the UNFCCC and the Paris Agreement. 

3. Pursuant to paragraph 1, the Parties shall endeavour to cooperate bilaterally, and in other fora, as appropriate.

Would these provisions have an impact during implementation of the trade agreement?  

Of innovation, targets and compliance - a new template in FTAs?

More on the recently concluded EFTA-India FTA.

As reported in the press, this is perhaps for the first time in the negotiating history of FTAs that investment promotion targets and job creation have been included in a legal free trade agreement in the EFTA-India FTA.

As this press note stated, 

• EFTA has committed to promote investments with the aim to increase the stock of foreign direct investments by USD 100 billion in India in the next 15 years, and to facilitate the generation of 1 million direct employment in India, through such investments. The investments do not cover foreign portfolio investment.
• For the first ever time in the history of FTAs, a legal commitment is being made about promoting target-oriented investment and creation of jobs.

Chapter 7 of the FTA speaks about Investment Promotion and Co-operation. The relevant provision related to foreign direct investment commitments is listed here:

Article 7.1.3 states:

The Parties share the objectives that: 

(a) the EFTA States shall aim to increase foreign direct investment from investors of the EFTA States into India by 50 billion (US dollars) within 10 years from the entry into force of this Agreement and an additional 50 billion (US dollars) in the succeeding 5 years 6 7 ; and

(b) the EFTA States shall aim to facilitate the generation of 1 million jobs8 within 15 years in India from the entry into force of this Agreement, resulting from inflows of foreign direct investment from investors of the EFTA States into India.

Non-compliance is not subject to dispute settlement but India can take remedial measures under Article 7.8 to rebalance the concessions given to the EFTA States in the Schedule of Commitments under the Chapter on Trade in Goods.

Some quick thoughts:

Though the chapter is not subject to dispute settlement  ( a lengthy legal process of a panel hearing and appellate review), there are remedial measures for "non-compliance". Thus, it is not hard law in terms of legal enforcement through dispute settlement but soft law with a bite! Further the obligation of foreign direct investment is only on EFTA and not vice vera. FDI targets and job employment figures for the first time as "commitments" in an FTA.

FTA templates are not static they say. This is surely on good example.

Another FTA in the making.

(EFTA)

Fresh from the press today! 

Reports of a free trade agreement between India and European Free Trade Association (EFTA) consisting of The Governments of Iceland, the Principality of Liechtenstein, the Kingdom of Norway and the Swiss Confederation are in the news here, here, here and here.

So an FTA would have a basic text - and here it is - the India-EFTA FTA.

The detailed commitments parties to the FTA have made is found here.

Of WTO Ministerial Conferences and outcomes

(https://www.wto.org/english/thewto_e/minist_e/mc13_e/mc13_e.htm)

For those who are cursorily following the developments of the 13th Ministerial Conference at the World Trade Organization which just concluded at Abu Dhabi, UAE, here is a detailed list of decisions that were agreed upon hosted on the WTO website.

The Abu Dhabi Ministerial Declaration, the main Ministerial decision, is here. Much is said about the breakdown of the dispute settlement process in the WTO with the Appellate Body being defunct. The Ministerial Conference agreed to work towards a resolution with this decision.