14th November 2020

The Hindu, PIB, IE and Others

Index

A) Science and Technology/Defence/Space

1. Quick Reaction Surface-to-Air Missile (QRSAM) (IE)

B) Agriculture, Geography, Environment and Biodiversity

2. Atlantic Ocean’s largest protected marine reserve (IE)

3. Northeast monsoon and La Nina conditions (IE)

C) Art, Culture and History

4. Bandi Chhor Divas (TH)

D) Schemes/Policies/Initiatives/Awards/Social Issues

5. Pneumonia and Diarrhoea Progress Report: International Vaccine Access Centre (IVAC) (TH)

E) Economy

6. Regional Comprehensive Economic Partnership (RCEP)

A) Science and Technology/Defence/Space

1. Quick Reaction Surface-to-Air Missile (QRSAM) (IE)

Context: In an important step towards its induction, the indigenously developed Quick Reaction Surface-to-Air Missile (QRSAM) achieved a direct hit on to a Banshee pilotless target aircraft at medium range and altitude in a test conducted by Defence Research and Development Organisation (DRDO).

Analysis

  • The QRSAM is a short-range surface-to-air missile (SAM) system, primarily designed and developed by DRDO to provide a protective shield to moving armoured columns of the Army from enemy aerial attacks.
  • The entire weapon system has been configured on a mobile and manoeuvrable platform and is capable of providing air defence on the move.
  • It has been designed for induction into the Army and has a range of 25 to 30 km.
  • The indigenously developed state-of-the-art QRSAM will significantly boost the defence capabilities of our armed forces.
  • The all-weather network-centric QRSAM missile system can engage multiple threats such as aerial targets, tanks and bunkers within a strike range of 20km to 30km.
  • It is equipped with a 360° rotatable, electronic-mechanically operated, turret-based launch unit.
  • The all-weather and all-terrain missile, which can be mounted on a truck and stored in a canister, is equipped with electronic counter measures against jamming by aircraft radars.
  • QRSAM uses solid-fuel propellant and has a range of 25-30 km.

B) Agriculture, Geography, Environment and Biodiversity

2. Atlantic Ocean’s largest protected marine reserve (IE)

  • Recently, the isolated UK Overseas Territory of Tristan da Cunha, which is home to the world’s most remote human settlement, declared the largest fully protected Marine Protection Zone (MPZ) to safeguard wildlife in an area of the South Atlantic Ocean.
  • This will close over 90 percent of their waters to harmful activities such as bottom-trawling fishing, sand extraction and deep-sea mining.

What is Tristan da Cunha?

  • Tristan da Cunha, which is inhabited by less than 300 humans is a small chain of islands over 6,000 miles from London in the South Atlantic (about 2,000 km from the nearest land) and the water around the islands are considered to be the richest in the world.
  • The mountainous archipelago Tristan da Cunha is home to tens of millions of seabirds and several unique land birds that are comparable to the Galapagos island finches.
  • However, some of its seabirds that are not found anywhere else in the world face threats including illegal and unregulated fishing activities, overfishing, plastic pollution and climate change.
  • The National Geographic reported that invasive mice brought to the islands by passing ships kill over 2 million birds a year.
  • The island group is also home to the World Heritage Site of Gough and Inaccessible Islands, which is one of the most important seabird islands in the world.

What does the announcement mean for the island group?

  • After joining the UK’s Blue Belt Programme, it will become the largest no-take zone in the Atlantic and the fourth largest on the planet.
  • This means fishing, mining and any such activities will not be allowed.

Blue Belt Programme

  • The Blue Belt Programme provides over 27 million pounds over a period of five years for marine conservation around the UK Overseas Territories and international organisations.

Marine Protection Zones (MPZs)

  • MPZs involve the management of certain natural areas for biodiversity conservation or species protection and are created by delineating zones with permitted and non-permitted areas within that zone.
  • As per the National Geographic Society’s Campaign for Nature Initiative, over 30 percent of the world’s oceans need to be protected to allow ecosystems to provide benefits like ample fish stocks.

3. Northeast monsoon and La Nina conditions (IE)

Context: After a delayed onset followed by subdued activity, the Northeast monsoon has finally shown some signs of revival over the southern peninsular region.

Analysis

  • Two consecutive streams of easterly winds have made the winter monsoon active.
  • The India Meteorological Department (IMD) warned of heavy rain accompanied by thunder and lightning across Tamil Nadu, Karaikal, Puducherry, coastal Andhra Pradesh, Kerala and Lakshadweep.
  • Tamil Nadu receives 70 per cent of its annual rain between October and December.
  • Other subdivisions in the South — Rayalaseema, interior Karnataka and coastal Andhra Pradesh — remain in the normal category, but rainfall continues to be deficient between 3 and 10 per cent this season.
  • This year, the IMD forecast a below normal rainfall in the ongoing season over extreme southern parts of Tamil Nadu.
  • One of the drivers for subdued rain was the prevailing La Nina conditions.
  • During years when La Nina conditions prevail, the Northeast monsoon remains below normal.
  • La Nina is cooler than normal sea surface temperatures recorded along the East and central Pacific Ocean. It influences rainfall over India.

C) Art, Culture and History

4. Bandi Chhor Divas (TH)

Context: When Hindus and others celebrate Diwali, the festival of lights, Sikhs remember the release from prison and return to Amritsar of the sixth Guru, Guru Hargobind in 1619.

  • The name Bandi Chhor Divas means “liberation of prisoners” day.

Analysis

  • Guru Hargobind, the sixth Sikh Guru, developed a strong Sikh army and gave the Sikh religion its military character, in accord with the instructions of his father, Guru Arjan (1563–1606), the first Sikh martyr, who had been executed on the order of the Mughal emperor Jah?ng?r.
  • Up to the time of Guru Hargobind, the Sikh religion had been passive. At his succession ceremony Guru Hargobind is believed to have defiantly borne two swords, symbolizing his twin authority as temporal (miri) and spiritual (piri) head of the community.
  • He also devoted much time to military training and the martial arts, becoming an expert swordsman, wrestler, and rider.
  • Despite opposition, Guru Hargobind built up his army and fortified his cities.
  • In 1609 he built at Amritsar the Akal Takht (“Throne of God”), a temple and assembly hall combined, where both spiritual and temporal matters pertaining to the Sikh nation could be resolved.
  • He built a fort near Amritsar and named it Lohgarh.
  • The Mughal emperor Jah?ng?r viewed the buildup of Sikh power as a threat and had Guru Hargobind jailed in the fortress of Gwalior.
  • For 12 years Guru Hargobind remained a prisoner, but Sikh devotion to him only intensified.
  • Finally, the emperor, apparently seeking the favour of the Sikhs as possible allies against the Indian states still defying Mughal rule, relented and set the Guru free.
  • Guru Hargobind followed his former militant course, recognizing that a clash with Mughal power was coming.
  • After Jah?ng?r’s death (1627) the new Mughal emperor, Sh?h Jah?n, persecuted the Sikh community in earnest.
  • The Sikhs under Guru Hargobind defeated Sh?h Jah?n’s armies four times, crushing the myth of Mughal invincibility.
  • To the Sikh ideals of his predecessor, Guru Hargobind thus added another: the right and duty of the Sikhs to defend their faith by the sword if necessary.
  • Shortly before his death, Guru Hargobind appointed his grandson, Har Rai, his successor.

D) Schemes/Policies/Initiatives/Awards/Social Issues

5. Pneumonia and Diarrhoea Progress Report: International Vaccine Access Centre (IVAC) (TH)

Context: India has made significant progress in its vaccination coverage to prevent child pneumonia and diarrhoea deaths, according to the latest annual Pneumonia and Diarrhoea Progress Report released by the International Vaccine Access Centre (IVAC).

Analysis

  • This year’s report card finds that although overall the world’s health systems are falling short of ensuring that children have access to prevention and treatment services, India has achieved the global target of 90% coverage for three of the five vaccines whose coverage is monitored in the report.
  • These vaccines are Diphtheria, Pertussis and Tetanus (DPT) vaccine; Measles-containing-vaccine first dose; Haemophilus influenzae type B; pneumococcal conjugate vaccine (PCV); and rotavirus vaccine.
  • While India’s coverage of rotavirus vaccine increased by 18 percentage points (35% rotavirus coverage in 2018 expanded to 53% in 2019), coverage against pneumococcal pneumonia increased by 9 percentage points (6% PCV coverage in 2018 expanded to 15% in 2019).

100-day agenda

  • In 2019, India completed the “100-day agenda” — an unprecedented national scale-up of rotavirus vaccine.
  • The report tracked progress by analysing 10 indicators from the latest available data on how countries are delivering key interventions — including breastfeeding, immunisation, care-seeking and antibiotics, oral rehydration solution (ORS), and zinc supplementation — shown to prevent pneumonia and diarrhoea deaths.
  • Of the 15 focus countries included in the report, India is one of just four countries that exceeded targets for exclusive breastfeeding.
  • However, nearly every country included in the report lagged in access to treatments against pneumonia and diarrhoea.
  • India failed to reach all four targets for treatment, the report stated, adding that the treatment for diarrhoea had the lowest coverage, with only 51% of children receiving ORS and 20% getting zinc.

E) Economy

6. Regional Comprehensive Economic Partnership (RCEP)

Context: India and ASEAN countries said they would explore ways to increase trade between them despite India’s exit from the 15-nation Regional Comprehensive Economic Partnership (RCEP) agreement.

  • The RCEP free trade agreement, which India walked out from a year ago, is expected to be signed on November 15, between China, Australia, South Korea, Japan, and 10 Association of South East Asian (ASEAN) nations.
  • However, they are expected to leave in a clause allowing India to rejoin at a later date.

Analysis

RCEP

  • The concept of the Regional Comprehensive Economic Partnership (RCEP) was promoted by the Association of South East Asian Nations (ASEAN) countries (Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Viet Nam) and six ASEAN FTA partners (Australia, People’s Republic of China, India, Japan, Republic of Korea, and New Zealand) in 2011, but an RCEP declaration came at the ASEAN summit in Phnom Penh in 2012, and negotiators met for the first time in 2013.
  • RCEP negotiations covers areas, including:
  1. Trade in goods and services,
  2. Investment,
  3. Market access,
  4. Economic cooperation,
  5. Intellectual property and
  6. E-commerce.
  • The RCEP includes countries that make up 45% of the world’s population with 33% of its GDP, and at least 28% of all trade in the world today. 
  • Once finalised, the RCEP trade grouping will be one of the world’s biggest free trade pacts.
  • The RCEP is modelled on FTAs of the ASEAN group with others and hence it is in an ASEAN+1 FTAs format.
  • ASEAN +1 FTAs refers to the FTAs that ASEAN group have signed with each of the neighbouring six countries – China, Japan, Korea, India, Australia and New Zealand.

Coverage Areas

  • The RCEP negotiation includes: trade in goods, trade in services, investment, economic and technical cooperation, intellectual property, competition, dispute settlement, e-commerce, small and medium enterprises (SMEs) and other issues but does not set environmental or labour standards.
  • RECP countries proposes that 90% of traded items should be tariff-free.

What are the potential benefits and disadvantages?

  • Once the deal is concluded, it will likely bring stability to trade relations in an area where such ties have historically been unpredictable.
  • The deal — in essence a free trade agreement between the signatories — would open up markets of each of the partner countries to the others.
  • But there are some niggling issues, especially between India and China, that are throwing a spanner in the works.
  • In addition, there is a fear that, at a time when the U.S. and China are embroiled in a trade war, a trade grouping with China at the helm would mean that the other countries, including India, would be forced to take its side against the U.S.
  • In fact, the India and U.S. are currently in talks on a bilateral trade deal, which could be put at risk if India is seen to be overtly siding with China.

Stumbling blocks for the RCEP

  • Seven years later, the main stumbling blocks for the RCEP are the India-China trade relationship, as well as some concerns from Australia and New Zealand on labour and environmental protections. 
  • In May 2019, China proposed a plan to conclude the negotiations without the naysayers, i.e. take the ASEAN+3 (China, Japan and South Korea) into the agreement, while leaving space for India, Australia and New Zealand to join later.
  • This suggestion was echoed by Malaysia as well, but was ultimately rejected.

Why is India holding up the deal?

  • India’s chief concern with the RCEP is the fact that it needs to protect its economy from the flooding of cheap imports from China.
  • Of all the countries in the RCEP, India is the only one not involved in any bilateral or multilateral negotiations for an FTA with China, and the worry for the government and industry is that an FTA within the RCEP will just become a cover for duty free trade into India for Chinese goods particularly affecting manufacturers of steel and aluminium, copper, pharmaceuticals and textile, which will be the worst hit in such a scenario.
  • RCEP negotiators have thus far agreed to allowing India a differential tariff ladder, for its FTA partners and its non-FTA partners (China, Australia and New Zealand) within the grouping.
  1. India has FTAs with the Association of Southeast Asian Nations (ASEAN), Japan, South Korea, and three-fourths of the bilateral trade already happens zero duty.
  2. India also has a small preferential trade agreement with China.
  • India has asked for strict “Rules of Origin” markings on all goods, so they don’t come in through a third country.
  • In addition, India wants to ensure the free flow of services (manpower) to RCEP countries as well, but has faced an uphill task as most countries tighten their immigration laws.
  • Except the Philippines, Laos, Myanmar and Cambodia, India has a trade deficit with all the remaining countries of RECP.
  • In decreasing order, the largest trade deficits of India within the RECP are with: China > South Korea > Indonesia > Australia
  • During the current round of talks in Melbourne, trade negotiators are focusing on market access for goods, services, and investment as well as negotiations on Rules of Origin, Intellectual Property and E-commerce.

Other major hurdles

  • That said, India’s problems with RCEP are not restricted to China. There are several other aspects to the RCEP agreement which include investments and e-commerce that are of major concern as well.
  • It has already been reported that India has agreed to the investment chapter of the RCEP agreement, which would mean that the government can no longer mandate that a company investing in India must also transfer technology and know-how to its Indian partners.
  • The investment chapter also says that a signatory government cannot set a cap on the amount of royalties an Indian company can pay to its foreign parent or partner.
  • These aspects have also raised concerns since technology sharing was a major way in which Indian companies were being able to compete globally.
  • Further, there is also the fear that companies might be forced to transfer huge royalty sums to foreign partners, instead of paying dividends to Indian shareholders.
  • The e-commerce chapter, which is still under negotiation, is quite tricky because it contains provisions that, if agreed to, would mean that India would not be able to pursue its data localisation plans.

What is the way forward?

  • It does not seem a good idea for India to be out of the agreement from its inception, only to join it later.
  • This would mean it would have missed out on the chance to frame the discussions and the precedents from the beginning and would have to accept them later.
  • India should make clear its stance and stick to it. If it is joining, it should say so and reassure other countries, which would possibly reduce friction during negotiations.
  • If India is not going to join the group, experts say it should stick to the decision and not change its mind later.

INDIA opted out of RCEP

  • India eventually decided to play it safe by pulling out at the last minute from the Regional Comprehensive Economic Partnership (RCEP) which was finalised by 15 countries in Bangkok recently.
  • That India runs a massive bilateral trade deficit of $53 billion with China and the fact that China has not taken satisfactory efforts to whittle down the deficit certainly were major inputs in India’s decision.
  • Second, India’s experience with countries with which it has signed free trade agreements till now is not exactly a happy one. Though trade has increased post-FTA with South Korea, ASEAN and Japan, imports have risen faster than exports from India.
  • India has a bilateral trade deficit with most of the member countries of RCEP.
  • More importantly, while exports to RCEP countries account for just 15% of India’s total exports, imports from RCEP countries make up 35% of the country’s total imports.
  • Given this, it is obvious that in the immediate context the country had more to lose than gain from joining RCEP.
  • India’s request for country-specific tariff schedules was rejected early in the negotiations.
  • So was its suggestion of an auto-trigger mechanism to check a sudden surge in imports from particular partner countries.
  • India also argued for stricter rules of origin, and rightly so too, but this too failed to pass muster.
  • Movement of professionals was another area that saw an impasse.
  • Given these, there was little chance of the political leadership agreeing to join the bloc.
  • Policymakers must have reasoned that India has active FTAs with most members of the RCEP except China, Australia and New Zealand and there will be no economic impact.
  • However, the fallout of India’s decision is that it has burnished its image as a protectionist nation with high tariff walls.
  • With a market of 1.3 billion people, there is bound to be more pressure on India to open its gates.
  • The smart way to handle this is to:
  1. Initiate reforms on the export front,
  2. Bring down costs in the economy and,
  3. Simultaneously, increase efficiencies.
  • India cannot miss out on being a part of global supply chains and this can happen only if tariff barriers are reduced.
  • And the best way to balance the effect of rising imports is by promoting exports. Tariff walls cannot be permanent.

Why joining the RCEP would have proven suicidal for India’s dairy sector?

  • The key fear of the dairy sector was that tariff clauses for agriculture in the RCEP are much more severe compared to the existing World Trade Organization (WTO) agreement.
  • While the WTO allows a country to fix tariffs up to a certain maximum, or bound tariff, for a given commodity line, the RCEP binds countries to reduce that level to zero within the next 15 years.

A self-sufficient sector

  • India’s dairy sector provides livelihood to about 70 million households.
  • A key feature of India’s dairy sector is the predominance of small producers.
  • In 2017, if the average herd size in a dairy farm was 191 in the U.S., 355 in Oceania, 148 in the U.K. and 160 in Denmark, it was just 2 in India.
  • Yet, due to Operation Flood after the 1960s, India’s contribution to world milk production rose from 5% in 1970 to 20% in 2018.
  • Today, India is largely self-sufficient in milk production. It does not import or export milk in any significant quantity.
  • If we consider global milk trade, developed countries account for 79% of the total world export of milk. Major players are the U.S., the EU, Australia and New Zealand. A country like New Zealand exports 93% of its milk production.
  • On the other hand, developing countries account for 80% of the world’s total milk imports.
  • Though India is self-sufficient in milk production, China imports about 30% of its milk requirement.
  • Thus, some of the major players in the global milk trade are in the RCEP region. This is why Australia and New Zealand, deprived of the lucrative markets in the U.S. after the demise of the Trans Pacific Partnership (TPP), have had a deep interest in the RCEP agreement.

Growth of MNCs

  • Multinational dairy firms had been building a strong presence in India even prior to the RCEP talks. At present, these firms are forced to buy milk from Indian farmers.
  • The reason is that the applied tariff for dairy products in India is about 35%. The bound tariff would have fallen to zero if the RCEP had come into effect. It would have then been far more profitable for firms to import milk from New Zealand or Australia rather than buy it from Indian farmers. The sale price of milk received by Indian farmers would have fallen sharply.
  • The unit cost of milk production is relatively low in countries like New Zealand because of extensive grazing lands (which reduce feed costs), mechanised operations and the advantages of economies of large-scale production, and the high productivity of milch animals (about 30 L/day).
  • In addition, New Zealand government policy has consciously helped its major company, Fonterra, to become the dairy giant that it is.
  • Fonterra, which controls 90% of the New Zealand milk market and one-third of world trade in milk, is feared even by large American and European dairy firms.
  • A key demand of American dairy firms during the TPP negotiations was that New Zealand should break up and end the monopoly of Fonterra.

False arguments

  • Two arguments were raised in favour of India signing the RCEP.
  • First, it was argued that India would soon become a milk-deficient country and be forced to import milk. Hence, it would be better if India enters the RCEP today rather than later.
  • Forecasts from NITI Aayog show that this argument is wrong. In 2033, India’s milk production would rise to 330 MMT while its milk demand would be 292 MMT. Thus, India is likely to be a milk-surplus country by 2033.
  • Second, it was argued that the quantity of milk imports from New Zealand to India are unlikely to exceed 5% of their total exports. As a result, its impact on Indian prices would be insignificant.
  • This too is a false argument. As data put together by Amul show, 5% of New Zealand’s exports in this sector is enough to flood India’s domestic market and enough to ensure that Indian dairy prices plummet.
  • If there are 70 million households dependent on dairy in India, the corresponding number is just 10,000 in New Zealand and 6,300 in Australia. Reasoned analysis shows the socio-economic costs of India becoming a party to the RCEP agreement.

FDA’s are complicated!!

  • Mere signing of an FTA does not guarantee an increase in exports.
  1. But even the high import duties coming down to zero through the FTAs do not guarantee exports. Japan reduced duty from 10% to zero for Indian apparels through an FTA in 2011.
  2. But India’s apparel exports to Japan have nosedived from $255 million in 2010 to $152 million in 2018.
  3. Blame it on Japanese non-tariff barriers to trade (NTBs) such as special sourcing requirements. But NTBs are generally not negotiated in FTAs. Countries have to resolve these bilaterally.
  4. To summarise, FTAs cut import duties, but this is only one of many factors that decide if exports will increase.
  • A lower import duty regime in an FTA may or may not help in getting significant investments.
  • FTAs may or may not ease entry into global value chains (GVCs).
  • GVC production also requires harmonisation of product and quality standards.
  • For these reasons, FTAs alone do not make a country part of a value chain.
  • Not signing RCEP does not mean Indian economy is protectionist and inward looking.
  • India ranks higher than the U.S., Japan, and China in the trade openness ratio, the globally accepted measure.
  • The ratio is the sum of all imports and exports as % of GDP — India (43) is more open than the United States (27), Japan (35), and China (38).

The China factor in India’s RCEP move India’s demands at the RCEP negotiations included:

  1. Shifting the base year for tariff cuts from 2014 to 2019;
  2. Avoiding a sudden surge in imports from China by including a large number of items in an auto-trigger mechanism;
  3. Calling for stricter rules of origin to prevent dumping from China; and
  4. A better deal in services.
  • The China factor, therefore, was key to New Delhi’s assessment of costs and benefits.

Other Issues

  • Among the reasons are some that are already in the public domain – like the threat of circumvention of Rules of Origin due to tariff differentials, where countries take advantage of tariff differentials given to another country, and not offered to it.
  • Also, a long-standing request of India that the base rate of customs duty be changed from 2014 to 2019, as the RCEP, even if signed in 2019, would be ratified only by 2022, which means that the 2014 base rate would be hugely outdated even for the take-off point of the agreement.
  • A request was also made for tariff lines to be on an auto-trigger safeguard mechanism along with a review clause at a periodicity of three, as India’s experience with free trade agreements (FTAs) has been that it often leads to huge import surges that impair the domestic industry due to dumping.

MFN issue

  • Most significantly, an exclusion of Most Favoured Nation (MFN) obligations was sought in the investment chapter, i.e., India has given MFN status looking at its strategic interests.
  • “It cannot be anyone’s case that what India gives to its strategic allies or for geopolitical reasons will be handed out to all RCEP countries, including those with whom India has border disputes,” said a government source.
  • Plainly what this means is that without adequate safeguards, the RCEP could end up being an FTA with China through the back door with a huge trade deficit on the Indian side.
  • The government will go ahead with individual FTA negotiations with the U.S. and the European Union, but, clearly, these efforts would be informed by the RCEP experience.

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