India-Japan CEPA holds great promise

With the entire nation riveted on Anna Hazare's crusade against corruption throughout August, the news of a landmark event — the coming into force of the India-Japan Comprehensive Economic Partnership Agreement on August 1 — got sidelined in the media. In fact, as far as I am aware, there was no coverage of it in the e-media, either as straight reporting or in the form of discussions on its significance.

There have been many free trade agreements (FTAs) in the past; actually, as of 2010, there are 92 of them in operation, while 19 are under negotiation and 55 more have been proposed. But the thrust of FTAs is limited, being directed principally at the elimination of tariffs.

The Comprehensive Economic Partnership Agreements (CEPAs) which have come into vogue are in clear recognition, by the participating countries, of the need of an alternative, comprehensive, holistic approach to economic relations, to supplement the FTAs.

AS CATALYSTS

In essence, the CEPAs go beyond the FTAs as a catalyst for bringing about deeper and broader economic integration, encompassing diversification, liberalisation, and promotion of trade, and regulatory convergence, through predictable and transparent policies and their implementation, taking account of the core competencies, complementarities and mutuality of interests.

A simulated computer study shows that India's GDP can go up by as much as 3.45 per cent if it enters into CEPAs with the Asean countries (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam), and their Dialogue Partners (Australia, China, Japan, New Zealand and South Korea).

There are two reasons why the India-Japan CEPA acquires special importance. The first is that it is the first such agreement entered into by India with a developed country, its two previous CEPAs having been with Singapore and South Korea.

Thus, there is a great responsibility cast on both India and Japan to make a success of it, so that it becomes a path-setter for CEPAs with other developed countries.

The more such CEPAs there are between India and other developed countries, the greater the scope for international cooperation in finding agreed solutions to the looming problems.

On the other hand, if India stumbles in ensuring successful working of the CEPA with Japan, it might face difficulties in concluding similar agreements with the advanced industrial countries in general.

SOFTNESS FOR INDIA

The second reason conferring a distinction on the India-Japan CEPA is the fact that it coincides with the assumption of the office of the new Prime Minister of Japan, Mr Yoshihiko Noda.

He is probably the youngest (at 54 years of age) among the recent Prime Ministers of that country, and hence can be expected to have an open and pragmatic mind, with a touch of idealism, and demand a vigorous and disciplined work ethic in both government and party affairs.

More relevant to the CEPA is that by conviction, he is for trade liberalisation and lowering of barriers, and the agreement with India fits in with his ideological stand. The implementation of the CEPA may also benefit from his softness for India arising from a fortuitous circumstance.

Reportedly unhappy with the conviction by the International Military Tribunal for the Far East (IMTFE) of Japan's wartime leaders and their being hanged as war criminals, Mr Noda has long been impressed with the voting against the verdict by the Indian Judge (Radhabinod Pal) on the Tribunal, who wrote a 1,235-page judgment dismissing the legitimacy of the IMTFE as mere “victor's justice” and holding that “each and every one of the accused must be found not guilty of each and every one of the charges in the indictment and should be acquitted on all those charges”.

India should lose no time in inviting him to pay an official visit so as to strengthen the bonds already forged by the CEPA.

For, there is plenty for both countries to catch up with, by cashing in on the vistas of opportunities and advantages opened up by the CEPA. In my next column, I shall propose a strategic plan for getting the best out of it.