Multilateral newsletter April 2016

1Multilateral Newsletter

this IssueInside
Focus Story
India and APEC....................................................................2
ADB
Loans to Mytrah Energy Will Lift India’s Clean P
ower Output.........................................................................4
TAPI Pipeline to Bring Sustainable, Cleaner
Energy to India.....................................................................5
WORLD BANK
South Asia Remains World's Fastest Growing Region, but
Should Be Vigilant to Fading Tailwinds�� 6
April 2016, Volume 3, Issue 9
Message from Mr Chandrajit Banerjee, Director General, CII
India made a request, two decades ago, to become member of Asia Pacific Economic
Cooperation (APEC). Since then its relations with the member economies of APEC has
grown from strength to strength. Today, it accounts for 35% of India’s merchandise trade
and 1/3rd of its FDI inflows. Out of 21 APEC countries, India already has comprehensive
FTAs/PTAs in place with 11 countries. In addition, India has healthy bilateral relations with
most of the APEC countries and its linkages to ASEAN are getting much stronger.
All of this makes for a very compelling case for India’s membership of APEC.
For India, membership of APEC can boost its manufacturing endeavour and be one of biggest achievements
under “Act East Policy.” It will also provide opportunities for Indian Industry to connect with regional and
mega-regional production and supply chain networks in Asia and the Pacific.
The April edition of the newsletter outlines the various issues to be considered as India seeks membership
in APEC. It provides a brief background on APEC India and highlights the numerous economic and political
benefits that would accrue to APEC members. It also highlights the range of obstacles potentially blocking
India’s path and need deliberation.
Chandrajit Banerjee
Multilateral
Apparel Manufacturing has Potential to Create 1.2 Million New
Jobs: World Bank Report.....................................................7
ASEAN
ASEAN, US to further strengthen relations��8
ASEAN concludes Work Plan on Education 2016-2020.......9
World Trade Organization
India ratifies Trade Facilitation Agreement��10
NEWSLETTER

2 Multilateral Newsletter
Founded in 1989, APEC has taken great initiatives in connecting Asia-Pacific economies and reducing barriers to
trade and economic cooperation. The initiatives taken by APEC to simplify regulatory arrangements has helped
economies reduce barriers for foreign trade and investment.
The Asia-Pacific Economic Cooperation (APEC) - a premier regional institution accounting for over 43% of world
population, 60% of world population, 60% of world GDP and 47% of world trade is dedicated to promote trade,
investment and other linkages between economies of Asia-Pacific region.
APEC’s membership, which was 12 economies to begin with, steadily expanded to 21, but after 1998 there has
been no further expansion. Unlike other regional institutions, APEC provides opportunities for equal participation
of all valuable stakeholders including governments, institutions, private sector and others. APEC has been
excellently transparent in information sharing regarding regulatory standards, rules, procedures, capacity needs,
and multilateral initiatives conducted by member states outside its rubric.
APEC implements a wide variety of initiatives to help integrate the region’s economies and promote trade while
addressing sustainability and social equity.
India has emerged as a global growth engine with its GDP at over US$ 2 trillion in nominal terms, accounting
for 12% of global GDP. The Indian economy is the fastest growing large economy in the world growing at about
7.4% in 2014-15. Moreover, its 1.25 billion people make it a home to 17% of the world population. This enables
India to offer the world both a large consumer market and labour factory. The workforce in India is expected
to touch 869 million by 2020.
It’s been around 20 years now since India made its request to become member of APEC. Three countries-Russia,
Vietnam and Peru wanted to become member of APEC and applied for membership along with India in 1997.
They were granted membership at Vancouver meeting in 1997-98 but India was left out.
However, since then India’s economic and diplomatic engagement with the APEC countries has only gone better
and bigger. Eight APEC economies – China, USA, Hong Kong, Indonesia, Singapore, Korea, Japan and Malaysia
are among India’s top twenty trade partners and account for a third of its global merchandise trade.
India’s participation in APEC would help open its giant domestic market to investment for decades to come.
India is projected to be the world’s third largest economy by 2030 and will need over $1 trillion of investment
in infrastructure over the next decades.
India’s membership of APEC will usher threefold benefit to APEC, the region and the wider international economy.
India in the future will become the most populous nations in the world. India as a member will benefit APEC
in terms of greater trade and investment opportunities as well as more rational systems of governance and
cooperation among regional economies. It will also improve the effectiveness of APEC’s discussions of several
issues and importance for the region.
India’s future economic growth requires large scale investment, as reflected in the Indian government’s attempts
to energize the economy through increase foreign direct investments. An improvement in investment-friendly
policies have contributed to upscale the position of India globally.
Focus Story
India and APEC

Today, APEC economies represent the regional as well as global supply chains that drive the world and region
specifically. APEC has been an incubator of several regional initiatives. APEC membership will provide India the
opportunities to get connected with the sub-regional, regional and mega-regional production and supply chain
networks in Asia and the Pacific.
India becoming part of APEC will not only enhance India’s options but also strengthen India’s capacity to
become a prominent negotiator. APEC membership would help India to prepare and participate in two emerging
mega-regional trade agreements-the Trans-Pacific Partnership (TPP) and the Regional Comprehensive Economic
Partnership (RCEP) that are going to define and drive the future of global trade.
India can significantly benefit from APEC’s activities on investment facilitation. The work of APEC particularly
focuses on four areas that are starting a business, getting credit, trading across borders and enforcing contracts.
The areas are committed to make doing of business easier.
Indian entrepreneurs can take advantage of the APEC travel card which permits virtually visa free travel among
member economies. Trade barriers removal as APEC mission will help India.
Though with its gigantic consumer market and workforce, India is well positioned to claim its place in APEC,
some of issues that need consideration are
• While APEC membership doesn’t seem to have any binding obligations/clauses for India but many areas such
as government procurement, investment agreement obligations and Intellectual Property Rights among many
other might emerge as major issues of debate in coming days.
• Though India wants to remain engaged with the world, especially Asia as reflected through the “Act East
Policy”, it might have to pay an “Entry tax” for its APEC membership. This might come in the form of the
Information Technology Agreement- II (ITA-II). India is still not a signatory to ITA-II.
• There are mixed responses to the questions on the effectiveness of FTAs. According to government, Imports
have gone up compared to exports under the FTAs but India’s domestic industry was not getting hurt.
Interestingly, many FTAs have an adequate safeguard mechanism in case a particular industry gets hit. FTAs
with Japan, Korea and ASEAN did not have adverse impact. They have, in fact helped India integrating with
Global Value Chains.
• India is moving forward with many bilateral as well as regional FTAs. It is targeting year-end to close talks
with Australia for a Comprehensive Economic Partnership Agreement (CEPA) and RCEP.
Focus Story

ADB
Loans to Mytrah Energy Will Lift India’s Clean
Power Output
The Asian Development Bank (ADB) has approved loans of up to $175 million for private renewable energy
development to Mytrah Energy (India) Ltd (MEIL) to help it develop wind and solar power projects, which will
generate up to 1,200 gigawatt-hours of clean energy a year.
The projects being financed include wind power projects in Rajasthan, Madhya Pradesh, Andhra Pradesh, and
Karnataka, with combined capacity of 476 megawatts (MW), and photovoltaic solar power projects in Telangana
and Punjab with capacity of 100 MW. Bringing this clean power on stream is expected to help avoid nearly
1.2 million tons of carbon dioxide emissions a year from 2018, which would otherwise have been generated
by conventional fossil fuel plants.
“MEIL has a strong track record of developing renewable energy projects and this financing will allow it to expand
its capacity, resulting in substantial benefits including reduced fossil fuel use and strengthened energy security
for India,” said Mayank Choudhary, Senior Investment Specialist in ADB’s Private Sector Operations Department.
“It also supports ADB’s strategy of stepped up financing for renewable energy and increased support for private
investment in the sector.”
The project will see the development and commissioning of the plants by April 2017. The generated electricity will
be supplied to respective state power distribution companies under long term power purchase agreements.
MEIL, one of India’s fastest growing independent power producers from renewable sources, is a step down
subsidiary of the London Stock Exchange-listed Mytrah Energy Limited. It has 10 operating sites spread over
six states with existing wind power capacity of 616.6 megawatts. It ventured into solar power in 2015 and is
targeting total renewable energy capacity of 1,000 MW over the next 12 months.
ADB has been supporting the development of renewable energy in India since 2007, when it financed the first
set of wind projects under the IPP model. ADB has subsequently financed solar IPPs by assisting projects under
the National Solar Mission and various state policies. As part of its commitment announced by ADB in September
2015 to scale up clean energy financing to $6 billion a year by 2020, ADB will seek to sustain its private sector
activities, particularly in major renewable energy markets such as India.
Click here for more information

TAPI Pipeline to Bring Sustainable, Cleaner
Energy to India
ADB
Shareholders of the TAPI Pipeline Company Limited (TPCL) signed an Investment Agreement in a ceremony
witnessed by petroleum ministers and senior government officials of Turkmenistan, Afghanistan, Pakistan and
India and senior Asian Development Bank (ADB) officials. The TAPI pipeline will pave the way for the delivery
of sustainable natural gas supplies to India.
The Investment Agreement provides an initial budget of over $200 million to fund the next phase of the
Turkmenistan-Afghanistan-Pakistan-India (TAPI) natural gas pipeline. This includes funding for detailed engineering
and route surveys, environmental and social safeguard studies, and procurement and financing activities, to
enable a final investment decision, after which construction can begin. Construction is estimated to take up to
3 years.
“TAPI is a partnership that will bring about economic integration and prosperity in the region. It will not only
provide a long-term and sustainable gas supply to India but also allow the country to improve its energy supply
mix,” said K.D. Tripathi, Secretary of India’s Ministry of Petroleum and Natural Gas.
TPCL will build, own, and operate the TAPI pipeline, which once completed, will transport up to 33 billion cubic
meters of natural gas annually from Turkmenistan for the next 30 years. The pipeline stretches about 1,600
kilometers from the Afghan/Turkmen border to the Pakistan/Indian border
“TAPI exemplifies ADB’s key role in promoting regional cooperation and integration over the past 20 years. It
will unlock economic opportunities, transform infrastructure, diversify the energy market for Turkmenistan, and
enhance energy security for the region,” said Sean O’Sullivan, Director General of ADB’s Central and West Asia
Department.
Acting as TAPI secretariat since 2003 and as transaction advisor since 2013, ADB has been instrumental in
the progress of the TAPI pipeline to date. In the latter role, ADB helped establish TPCL, select Turkmengaz as
consortium leader, and finalize the Shareholders and Investment Agreements.

WORLD BANK
South Asia Remains World's Fastest
Growing Region, but Should Be Vigilant
to Fading Tailwinds
Led by robust growth in India, South Asia shows resilience in the face of turbulent international markets and
remains the fastest-growing region in the world, with economic growth forecasted to gradually accelerate from
7.1 percent in 2016 to 7.3 percent in 2017, a World Bank report said.
According to the twice-a-year South Asia Economic Focus, the region’s
economic performance prospects remain strong due to its limited exposure
to global turbulence, coupled with increasing investment activity.
However, there are also signs of fading tailwinds. Capital flows to the region
have declined and remittances from oil exporting countries have started to
weaken. Fuel and food prices remain low but are unlikely to keep falling.
As a result overall output growth is slower than previously anticipated and
inflation has recently been creeping up.
Given its weight in the region, India sets the pace for South Asia as a whole.
Economic activity is expected to accelerate from 7.5 percent in FY2016 to 7.7
percent in FY2017 based on the expectation of strong private investment,
a push in infrastructure spending, an improved investment climate, and
deleveraged corporate and financial balance sheets.
The report’s analysis of fiscal policy across the region suggests that
governments need to find a balanced path towards fiscal consolidation.
“South Asia has been resilient
to global turbulence due
to its limited exposure to
slowdowns in other major
economies coupled with the
tailwinds of favourable oil
prices, capital flows, and
remittances,” However, fiscal
and financial vulnerabilities
remain and countries should
strive to address them through
generating revenue and
creating more fiscal space”
Annette Dixon
World Bank South Asia
Vice President

WORLD BANK
Apparel Manufacturing has Potential
to Create 1.2 Million New Jobs:
World Bank Report
At a time when nearly one million people are expected to enter the workforce every month for the next three
decades, export-oriented apparel production in India and other South Asian countries has the potential to create
more and better jobs, says a new World Bank report.
The Stitches to Riches? Apparel Employment, Trade and Economic Development, launched in New Delhi today
is aimed at demystifying the global and South Asian apparel markets, estimating the potential gains in exports
and jobs, and identifying policies that can unleash South Asia’s export and job potential compared with those
of their closest competitors in the Southeast Asia region (Vietnam, Cambodia, and Indonesia).
As wages increase, China, the largest apparel manufacturer for the last 10 years, is expected to slowly relinquish
its lead position in the global apparel market, opening the door to other competitors. This could be a huge
opportunity for India and other South Asian countries. Even a 10 percent increase in Chinese apparel prices
could create at least 1.2 million new jobs in the Indian apparel industry, the report estimates.
Women are expected to benefit the most as their share in the total apparel employment is much higher than
their share in other industries. A one percent increase in expected wages in the textiles and apparel industry
could raise the probability of women entering the labor force by 18.9 percent, says the report.
The top four apparel producers in South Asia – Bangladesh, India, Pakistan, and Sri Lanka – have made big
investments in world apparel trade and account for 12 percent of global apparel exports. India also has a more
diversified export structure and has a well-developed fiber (cotton), textile and apparel manufacturing base.

ASEAN and the U.S. reaffirmed their strong determination to further deepen their cooperation. This commitment
was made at the 7th ASEAN-U.S. Joint Cooperation Committee (JCC) Meeting held at the ASEAN Secretariat. This
is the first JCC to be held since the elevation of the ASEAN-U.S. partnership to a strategic level in November
2015 and the successful convening of the ASEAN-U.S. Special Leaders’ Summit in Sunnylands, California last
February.
The meeting took stock of the cooperation under the Plan of Action to Implement the ASEAN-U.S. Strategic
Partnership (POA) 2016-2020 and noted the positive achievements made in the first four months of this year. Both
sides also reaffirmed key principles in guiding the cooperation, including upholding the principles of international
law as well as the respect and support for ASEAN centrality and ASEAN-led mechanisms. The U.S. highlighted
their support for the continued development of a rules-based regional architecture in the Asia-Pacific.
Further, there was substantive discussion on advancing cooperation under the five priority areas within the
ambit of the three ASEAN Community pillars, namely transnational challenges, maritime cooperation, economic
integration, fostering emerging leaders and women opportunities. The discussion covered ways to address
transnational challenges including trafficking in persons, wildlife trafficking and cyber security.
With the signing of the ASEAN Convention Against Trafficking in Persons, Especially Women and Children, the
Meeting welcomed the U.S.’ Aviation and Border Security Programme which was announced by President
Obama at the Sunnylands Summit. The Meeting also noted the U.S.’ initiative in supporting ASEAN’s efforts in
addressing illegal, unreported, and unregulated fishing through its cooperation with the Southeast Asian Fisheries
Development Centre and its efforts to strengthen regional, sustainable fisheries management.
Both sides welcomed the launch of the U.S.-ASEAN Connect at the Sunnylands Summit to deepen economic
engagement between the two sides and looked forward to the establishment of the ASEAN Connect Centres in
Jakarta, Singapore and Bangkok. The importance of strengthening small and medium enterprises which serve
as a key driver for economic development was also highlighted..
ASEAN, US to further strengthen relations
ASEAN

ASEAN
Senior education officials and representatives from ASEAN-affiliated institutions and international organisations
participated in a workshop to finalise the ASEAN Work Plan on Education 2016-2020. Held on 25-26 April at the
ASEAN Secretariat in Jakarta, the workshop was chaired by Assoc. Prof. Dr. Sisamone Sithirajvongsa, Permanent
Secretary of the Ministry of Education and Sports of Lao PDR and Chair of the ASEAN Senior Officials Meeting
on Education (SOM-ED).
The workshop concluded the formulation of the ASEAN work plan on education and provided opportunity to
build consensus among ASEAN Member States (AMS) on strategies to further develop the education sector in
ASEAN.
During the Opening Ceremony, Mr. Vongthep Arthakaivalvatee, Deputy Secretary-General for the ASEAN Socio-
Cultural Community, highlighted the importance of the ASEAN Work Plan on Education in strengthening, deepening
and widening educational cooperation among the ASEAN Member States, the ASEAN Dialogue Partners as well as
other regional platforms on education. He also emphasised that the said work plan would enhance commitment of
the ASEAN Member States to human development and provide opportunity for inclusive participation of all.
An important aspect of this work plan focused on cross-sectoral initiatives and opportunities related to education.
Relevant ASEAN Secretariat divisions such as those related to narrowing the development gap, connectivity, as
well as services and investment were invited to provide inputs to the work plan in relation to their respective
divisions and sector roadmaps.
The AMS expressed resolve to strengthen cooperation on education in ASEAN by identifying projects and
activities that they would lead in the next five years. Development partners such as UNESCO and UNICEF have
also indicated interest to support the implementation of the ASEAN Work Plan on Education 2016-2020.
Following the workshop, the final draft of the said work plan will be submitted to the SOM-ED for endorsement
and to the ASEAN Education Ministers Meeting for adoption. Both meetings will take place in May 2016 in Kuala
Lumpur, Malaysia. The ASEAN Work Plan on Education 2016-2020 is expected to be launched in June 2016.
ASEAN concludes Work Plan on Education
2016-2020

India has ratified the new Trade Facilitation Agreement (TFA). India’s WTO ambassador Anjali Prasad handed
over her country’s instrument of acceptance to Director-General Roberto Azevêdo
“I’m very pleased to receive India’s instrument of ratification from Ambassador Prasad,” DG Azevêdo said. “India
is one of the most dynamic economies in the world today and has become a top recipient of foreign investment.
Ratifying the WTO’s Trade Facilitation Agreement will help India further boost economic growth by reducing
trade costs and supporting its integration into the global economy.”
Concluded at the WTO’s 2013 Bali Ministerial Conference, the TFA contains provisions for expediting the
movement, release and clearance of goods, including goods in transit. It also sets out measures for effective
cooperation between customs and other appropriate authorities on trade facilitation and customs compliance
issues. It further contains provisions for technical assistance and capacity building in this area.
The TFA will enter into force once two-thirds of the WTO membership has formally accepted the Agreement.
India is the 76th WTO member to accept the TFA.
On 18 March India submitted its Category A notification to the WTO indicating which provisions of the TFA it
intends to implement upon entry into force of the Agreement.
In addition to India, the following WTO members have also accepted the TFA: Hong Kong China, Singapore,
the United States, Mauritius, Malaysia, Japan, Australia, Botswana, Trinidad and Tobago, the Republic of Korea,
Nicaragua, Niger, Belize, Switzerland, Chinese Taipei, China, Liechtenstein, Lao PDR, New Zealand, Togo, Thailand,
the European Union (on behalf of its 28 member states), the former Yugoslav Republic of Macedonia, Pakistan,
Panama, Guyana, Côte d’Ivoire, Grenada, Saint Lucia, Kenya, Myanmar, Norway, Viet Nam, Brunei, Ukraine,
Zambia, Lesotho, Georgia, Seychelles, Jamaica, Mali, Cambodia and Paraguay, Turkey, Brazil, Macao China, the
United Arab Emirates and Samoa.
The TFA broke new ground for developing and least-developed countries in the way it will be implemented. For
the first time in WTO history, the requirement to implement the Agreement was directly linked to the capacity
of the country to do so. In addition, the Agreement states that assistance and support should be provided to
help them achieve that capacity.
A Trade Facilitation Agreement Facility (TFAF) was also created at the request of developing and least-developed
country members to help ensure that they receive the assistance needed to reap the full benefits of the TFA
and to support the ultimate goal of full implementation of the new agreement by all members.
Implementation of the WTO Trade Facilitation Agreement (TFA) has the potential to increase global merchandise
exports by up to $1 trillion per annum, according to the WTO’s flagship World Trade Report released on 26
October 2015. Significantly, the Report also found that developing countries will benefit significantly from the
TFA, capturing more than half of the available gains.
India ratifies Trade Facilitation Agreement
World Trade Organization
Copyright © 2016 by Confederation of Indian Industry (CII), All rights reserved.
No part of this publication may be reproduced, stored in, or introduced into a retrieval system, or transmitted in any form or by any means (electronic, mechanical,
photocopying, recording or otherwise), without the prior written permission of the copyright owner. CII has made every effort to ensure the accuracy of information
presented in this document. However, neither CII nor any of its office bearers or analysts or employees can be held responsible for any financial consequences arising
out of the use of information provided herein. However, in case of any discrepancy, error, etc., same may please be brought to the notice of CII for appropriate
corrections.
Published by Confederation of Indian Industry (CII), The Mantosh Sondhi Centre; 23, Institutional Area, Lodi Road, New Delhi-110003 (INDIA)
Tel: +91-11-24629994-7, Fax: +91-11-24626149; Email: info@cii.in; Web: www.cii.in
For suggestions please write to us at: multilateralforums@cii.in

Multilateral newsletter April 2016

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Multilateral newsletter April 2016