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United Kingdom’s free Trade regime

Context: FTA has a far-reaching impact on the economy and society. FTAs cover a wide array of topics such as tariff reduction impacting the entire manufacturing and the agricultural sector; rules on services trade; digital issues such as data localization; intellectual property rights. Given this, one legitimately expects transparency and greater scrutiny of the FTA process both during and after the negotiations.

Issues with India’s FTA regime

• India negotiates most FTAs behind closed doors with very little information about the objectives and processes followed and negligible scrutiny.
• The Commerce Ministry also undertakes stakeholder consultations and inter-ministerial meetings but there is no public record of these discussions and the government’s response to the concerns of stakeholders.
• Entering into treaties and matters incidental to it such as negotiations, signing and ratification are within the constitutional competence of Parliament
• But, Parliament in the last seven-plus decades has not exercised its power on this issue, thus giving the executive unfettered freedom in negotiating, signing, and ratifying treaties including FTAs.

What we can learn from of Britain?

• The Department of International Trade (DFIT), U.K publishes a policy paper which is fairly detailed listing the specific advantages of signing an FTA with a particular country along with the expected economic gain,distributional impacts, the environmental impact, and the labour and human rights dimensions.
  • The policy paper that the DFIT publishes also contains the inputs and responses received by various stakeholders such as businesses, non-governmental organisations, and others.
  • In India, no such document is produced publicly that makes a case for signing an FTA and assessing its impact on the environment and society at large.

In U.K, the strategic objectives identified by the government for signing an FTA are scrutinised by the U.K. Parliament.

• This job is performed by the International Agreements Committee (IAC) of the British Parliament. In India, there is no mechanism for such parliamentary scrutiny of the executive’s actions during the FTA negotiations.
• The Parliamentary Standing Committee on Commerce (PSCC) rarely scrutinises the Indian government’s objectives behind negotiating and signing an FTA.

In the U.K, under the Constitutional Reform and Governance Act, 2010, the executive has to lay down a treaty before the British Parliament for 21 sitting days with an explanatory memorandum before ratifying it.

• In India, there is no mechanism for any role of Parliament in the ratification of treaties including FTAs.

What a model FTA law should entail?

• First, the executive should make a clear economic case outlining its strategic objectives publicly for entering into negotiations for a treaty such as an FTA.
• Second, the executive should be under an obligation to consultall stakeholders, respond to their concerns and make this information publicly available.
• Third, the Indian Parliament should constitute a committee on the lines of the U.K.’s IAC that will scrutinize the strategic objectives behind entering into an FTA.
• Fourth, the executive should place the FTA on the floor of Parliament for a certain duration, allowing Parliament to debate it, before ratifying it.

While the executive’s constitutional prerogative of entering into an FTA or international treaties, in general, is indisputable, this power should be exercised in a manner that makes the executive answerable. After all, an integral facet of democracy is to hold the executive to account for its actions. It should be no different for negotiating international treaties including FTAs