FTA negotiations expected this year: Mouneer Agbariya

India and Israel share a bilateral relationship that is getting stronger with time. In technology and skilled services, both have a lot to offer each other. A high level delegation is all set to come to India to discuss various factors like FTA, food processing technology, irrigation and many more. Mouneer Agbariya, the Economic Counsellor of the Embassy of Israel spoke to BE’s Priyalina Basu about their future plans.

Q) What is the progress of India and Israel free trade agreement?

A) The professional teams met in last May and discussed the chapters that the agreement will include and other matters related to the negotiations. It is expected that by the end of this year the two countries will have the first meeting of negotiations.

Q) How can Israeli technology help the food processing industry of India?

A) This can be mainly done by the transfer of technology of shelf-life, cooling chains, packaging, storage, etc. I think a key rule would be for the dairy to expand the variety of products to the consumers as well as the quality.The Indian Union Minister of Food Processing is expected to visit Israel accompanied by official and business delegations by the end of this year.

Q) An Israeli delegation is scheduled to visit Kolkata. What areas would they be looking at?

A) The delegation will be on water technologies. These technologies include water management, water treatment, desalination, waste water treatment, filtration, municipal supply and so on.

Q) How can Israeli know-how help to enhance the productivity of the dairy and agricultural industry in India?

A) The best way is by increasing the collaboration between the business communities of the two countries with the support and the guidance of the governments. The exchange of the business delegations, exhibitions, conferences, etc., will bring more interaction and definitely more exchange of opportunities.We have decided to open a trade office in Kolkata to assist the Embassy to increase and intensify its activity in this important part of India.

Britain seeks a bigger role in Asia starting with India

“Britain has lost an empire and has not yet found a role.”

— Former US Secretary of State Dean Acheson, 1962.

Margaret Thatcher, John Major, Tony Blair and Gordon Brown failed to rebut him. Can David Cameron, the new Prime Minister of Britain, be able to help Britain get an image makeover? Cameron during his maiden visit to India made it clear that Britain wanted to establish its strong presence through the dynamic economies of Asia.

Disillusioned by the ‘special relationship’ with the US and the overtly bureaucratic European Union (EU), Britain has subtly revamped its foreign policy. After India, Cameron is scheduled to visit China in November this year and William Hague, the UK Foreign Secretary who has already been to China and Japan, has written to all the employees of his office to make the best use of the country’s extensive diplomatic network.

Political:

From the moment he became the resident of 10 Downing Street, Cameron stressed a ‘special relationship’ with India. His ‘frank’ comments about Pakistan exporting terrorism and that it should do more to “crack down on and eliminate” terrorists, earned praise from Indian officials who had been lukewarm in their response to the staid Labour government led by Gordon Brown.

Britain, one of the five permanent members of the United Nations Security Council, has been backing India’s claim for a permanent membership.

Economic:

According to several indicators, while the diplomatic relations between India and Britain have been cordial, from the British perspective, there were ground level gaps on the economic front.

India dominates in sectors like financial services, retail and education. Jo Jones, a Tory MP from Orpington, commented, “Market access to India in these areas that are important to Britain is still not very easy.” Eyeing these sectors to help in the acceleration of economic growth back home, Cameron requested India to further open up these sectors to the mutual benefit of both countries. At present, India allows 51% FDI in the single brand retail sector, but multi-brand retailing is still a closed sector for foreign investment. The FDI from Britain to India has fallen steadily in the last five years. In 2007-08, it was INR 4,690 crore out of INR 9,8664 crore that declined in 2009-10, to INR 3,094 crore out total of INR123,378 crore.

On the trade front, India is in an advantageous position. According to the latest report released by UK Trade and Investment, India is the fourth largest investor in the UK, ahead of Germany and China and behind only the US, Japan and France. Britain, on the other, has fallen from being the third to the thirteenth largest trade partner of India. According to Keith Vaz, Labour MP from East Leicester-shire, “India today is so powerful that it does not need to count UK anymore but the UK cannot do business outside EU without India.”

While Britain’s market might not be big, India will benefit from stronger economic ties with Britain as it will help in quicker realisation of the Free Trade Agreement with the huge EU market. India and EU have at present a GBP50 billion a year two-way trade. In his media address, Cameron stressed Britain’s strengths: “We have access to European markets. We have a highly trained workforce and as I have said, we are one of the most open and welcoming economies.”

Britain also sought India’s help to get over the sovereign debt crisis. The economic recovery in Britain has been rather sluggish in the post-meltdown period. Faced with the spiralling fiscal deficit, the UK government has resorted to massive austerity measures. Its economy grew by just 1.1% in the second quarter of 2010 after clocking 0.3% expansion in the previous three months.

In the energy sector, India can reap the benefit of buying offshore stakes of BP in Vietnam.

Defence:

India will benefit by the 700-million pound (about ` 5,500 crore) military deal to acquire 57 additional Hawk advanced jet trainers for the Indian Air Force and Navy, in two separate contracts. This means getting access to the higher and sophisticated technology in which Britain excels. Cameron said, “We have a very strong defence industry and I am delighted to see the BAE-HAL agreement. I think we bring lots of expertise we can share with you.”

Education:

Prior to Cameron’s visit, education was thought to be the bone of contention between the two countries as the British government had decided to put a cap on the non-EU immi-gration of skilled labour. While Valerie Vaz, a Labour MP, argued that Britain must encourage more doctors from India to work in Britain’s national health services, there was no concrete discussion on the issue. This was overshadowed in noise over issues like the return of the Kohinoor. The only comment made on skilled labour was by the British Business Secretary Vince Cable who said that the coalition partners of the ruling regime in Britain had agreed to form a pact on immigration outside the EU, but it would not hamper investments from India.

Indian students are a majour source of revenue for the British government just as degrees from famous British colleges are of value to Indian students. This understanding was evident in Cameron’s statement to the press, “I think we have some of the best universities of the world and I have brought 14 Vice-Chancellors with me. We have one of the strongest science bases in the world and we brought institutions like Welcome Trust with us.” The two sides agreed to launch a new phase of the UK-India Education and Research Initiative. But there was no promise to reduce the amount in the education bond that the Indian students will have to pay before going there to study.

The three-day visit was not about overnight changes in bilateral relations. What Cameron did was to try and transform a “cordial” relation-ship into a “better, highly fruitful” one. Time, as usual, will be the performance evaluator.

Copyright@Business Economics August 1 page no 8-9

Voice for Veto

India is willing to compromise on the veto power for a permanent seat in the UNSC stating that it is more important to make itself heard on issues of international security

Priyalina Basu

For a country, a permanent seat in the United Nations Security Council (UNSC) is to declare that it has ‘arrived’. But the elite club that controls world politics, especially its permanent members, the P5 (Britain, the US, France, Russia and China), is far from rolling out the red carpet for the arriveste powers like India and Brazil or for that matter even Germany and Japan.

The emerging powers, rather than push their way in with a bang, are willing to go slow and steady and compromise on the distinguishing feature of the power seat – the right of veto.

Hardeep Singh Puri, India’s envoy to the UN said, “The new permanent members shall not exercise the right of veto until the question of the extension of the right of veto to new permanent members has been decided upon in the framework of the review mandated fifteen years after the entry into force of the Council reform.”

Anachronistic Approach

At a time when other multilateral set-ups like the IMF (International Monitory Fund) or the World Bank are going through reforms to be in touch with the new realities and shifting power-dynamics of the world, the UNSC prefers to be frozen in the past. This despite there being constant calls for its reform.

In 2004, a team of advisers came up with recommendations for reforming the UNSC. The G4 nations issued a joint statement to back each other’s claims for permanent membership. In 2006, India decided to run for a Security Council seat and has been canvassing for the spot since then. Nineteen countries including Nepal, Sri Lanka, Afghanistan and Bangladesh spoke in favour of giving Indian a seat on the Security Council table starting January 2011 at a meeting in New York.

Most of the permanent members do realise that the time has come to accept that the emerging powers cannot be kept waiting or away from key decisions that affect them. According to former British Prime Minister Tony Blair, “A UNSC without India as a permanent member is an anachronism. An IMF or a World Bank without a proper role for India will no longer do, India will demand and India will receive the position due to one of the world’s major powers.”

William Burns, the US Under Secretary of State for Political Affairs, favoured India’s bid by saying, “India’s expanding global role will naturally make it an important part of any future consideration of reform of the United Nations Security Council.”

But in all the support, there has been no mention of India’s veto right. So it is assumed that the new permanent members shall be deprived of this power.

Necessity or Not?

Now the question is: Do we really need to have a veto power? Yes. Being an UNSC permanent member without the veto is like fighting without a weapon. It gives an edge during negotiations.

According to the UN charter, each of the per-manent members enjoys certain powers

· Investigate any situation threatening international peace.

· Recommend procedures for peaceful resolution of a dispute.

· Call upon other member nations to completely or partially interrupt economic relations as well as sea, air, postal, and radio communications, or to sever diplomatic relations.

· Enforce its decisions militarily or by any means necessary.

· Oversee workings of the Counter Terrorism Committee (sets the benchmarks of counter terrorism practices at the global level) and the Military Staff Committee (that plans UN military missions and assists in the regulation of armaments)

However, all these are useless without the veto. Any of the UNSC’s permanent members can prevent the adoption of any (non-‘procedural’) UNSC draft resolution they dislike by using the veto. Even the mere threat of a veto may lead to changes in the text of a resolution, or it being withheld altogether (the so-called ‘pocket veto’). Therefore, it is probable that India’s initiative on these issues would be rejected if it goes against the interest of the P5, especially of China.

Moreover, it goes against the democratic set-up of the Security Council. Each of the permanent members of the Council should have the same power. Only five members having exclusive veto power sometimes goes against the interest of the members of other countries. On the other hand, it is argued that if too many powers have the veto then UNSC resolutions will be few and far between. The core issue then becomes whether there should be a veto or a vote by majority only.

But as the veto is not likely to be given up by the P5, a more realistic approach would suit India, especially when sharing the table with powers like China with whom it has some major disputes. It is felt that if the new entrant to the UNSC will compromise from the beginning, it will start from a weak position and will always be at a disadvantage. But with hardly any progress on the UNSC reform front, weariness has set in. India prefers being a partner in discussions on issues of global concern rather than wait for the diplomatic trump card of overturning decisions contrary to its position.

Consumers interested in sustainable products

Albe Zakes

Vice President

Media Relation Terra Cycle

Terra Cycle, Trenton, New Jersey, is one of the fastest growing eco -friendly manufacturers of the world . Founded in 2001, it makes affordable eco friendly products from a wide range of different non- recyclable waste materials. The company makes 50 products available at major retailers like Walmart, Target, The Home Depot, OfficeMax, Petco and Whole Foods Market. Albe Zakes, Vice President, Media Relations, spoke to BE' Priyalina Basu about the innovative eco friendly enterprise.

Q) What is the annual turnover of the company?

A) In 2009, we made 7.6 million in revenue. In 2010, we project 15 million.

Q) How much trash do you recycle each year?

A) We collect roughly 15 million units per week at the moment and have collected close to 2 billion units of waste since 2007.

Q) What kind of trash do you mainly recycle?

A) We use food and other consumer goods packaging that is difficult to recycle. For example, used drink pouches, crisp bags, yoghurt containers, used writing instruments, glue bottles, granola bar wrappers etc.

Q) What technology do you use?

A) Fusing the materials, also densifying and pelletizing as well as direct reuse.

Q) What are your future plans and does it include making use of the wastes in India?

A) We plan to continue expanding the types of materials we can collect and upcycle (currently 32 different types of materials). We will continue to expand throughout the world. We are currently operating in the US, Canada, Mexico, Brazil, the UK, and Ireland and are quickly moving into mainland Europe. Then we hope to start moving into the Asian markets and India!

Q) Has the demand for recycled products increased and does this reflect growing consumer awareness on good environ-ment practices?

A) Yes, we believe so. We have sold more products every year since our founding. I believe it represents two separate interests moving ‘closer’ together. The consumer has become more educated and thus interested in sustainable products; but also sustainable products are becoming more affordable, more effective and more available making it far easier for the consumer to make the switch.

Q) You have mentioned partnerships with consumer goods companies to find new ways of making use of waste. What are these ways and what lessons can be imbibed by India in this regard?

A) We collaborate with the consumer good manufacturers that make the product or the packaging we collect. They have an incentive to fund the collection of their packaging because it makes their product more sustainable and more attractive to an ever-growing segment of consumers.

In addition, the dollars are easy to come by: they simply buy slightly less advertising and use the dollars they save to fund our programmes. This concept could easily be replicated almost anywhere.

Reusable Bags, a US-based company, was founded in 2002. It has been a leading force in the reusable movement and has been fighting the mindless over-consumption of “use & toss” items. Realising early on the absurdity of the prevailing disposables mentality, it inspired a grassroots movement towards more sensible, conscious consumption of disposables. Vincent Cobb, founder of reusablebags.com spoke to Priyalina Basu about the growing consumer demand for eco-friendly products.

Q) How receptive are buyers to using bags from what would otherwise have been “trash”? Is there a conscious effort to buy recycled stuff?

A) There is definitely an interest in bags made from recycled materials. Buyers of reusable bags are people who are already concerned with their impact on the environment, so they are very receptive to the idea of taking something that would be thrown away and putting it to better use. There are a lot of innovative, recycled fabrics coming to market that look just as good, if not better than virgin materials.

Take Eco-Circle fabric, for example. It is durable, has a gorgeous look and can be used in place of materials such as nylon. And, it’s made of recycled, post-consumer materials such as plastic bottles. The downside of this trend is that many recycled materials are virtually indistinguishable from virgin materials, so it opens the door for counterfeits in the market.

Q) Do you see the trend for this kind of products increasing?

A) Absolutely. More of these kinds of products are hitting the market, and consumers are interested. Another trend I have seen is “upcycling”, which is the repurposing of other types of materials into bags. It gives these materials a second life and is basically recycled material in its purest sense. For example, our reuseit rice bag totes are made from bags that hauled rice or other goods in freighters. With just a few cuts and stitches, the bag can be reused as a shopping bag and the original rice bag is kept out of the landfill. Because it still has the look, texture and strength of a rice bag, it’s a very unique product that customers love to carry. And, it’s incredibly durable. You can also find old billboards and juice boxes repurposed as bags.

Q) Are you planning to diversify your end-products?

A) Yes. Innovation and development are things we are very passionate about. The market and breadth of recycled materials are rapidly growing and evolving and so are we.

Tale of two tragedies

Iconic images of a dead child after the poisonous gas leak in Bhopal in 1984 (Below) and of a pelican struggling in the water polluted by the BP oil spill in the Gulf of Mexico this year (Above)

Recently two compensations have made headlines- British Petroleum (BP) oil spill in the Gulf of Mexico and the Bhopal gas tragedy (1984). BP has settled a compensation of USD 20 billion with a sincere apology within 56 days of the oil catastrophe, considered as the largest offshore oil spill in the US.
In an interview with Politico, President Obama said, “In the same way that our view of our vulnerabilities and our foreign policy was shaped profoundly by 9/11, I think this disaster is going to shape how we think about the environment and energy for many years to come.”
The Union Carbide India Limited (UCIL) Gas leak disaster at Bhopal provides a stark contrasting picture. The court fined the seven convicted UCIL officials USD 2715 apiece and UCIL INR 5 lakh for causing the death of some 15,000 people and affecting nearly five lakh people over the years with several defects and diseases.
In India, instead of strongly criticising the Court’s soft judgement on the offenders, the former Chief Justice of India, A. M. Ahemedi said, “The hue and cry is happening because people want to raise the issue.”
This leads to a serious question: Are our laws more lenient for foreign companies unlike in the US? The answer unfortunately is YES. The entire procedure of compensation and regulation of a foreign/domestic company depends on how stringent the law of the land is and how determined are its enforcers to carry out their responsibilities.

Laws and implementation:
The US was able to extract a hefty compensation along with USD 75 million for cleaning the oil with the collaboration between federal and state authorities and BP by a legal process known as the Natural Resource Damage Assessment (NRDA) established under the 1990 Oil Pollution Act.
However, in India, we do not have such strict laws that the MNCs are bound to observe. Even now, as the Pollution Control Board’s report states, the cyclone prone industrial zones of the country like Haldia are disaster-prone due to the lack of constant monitoring system and disaster resistant infrastructural mechanisms.
If we take the Nuclear Liability Bill for instance, we can see that certain clauses indirectly allow a way out for the manufacturers and the builders of the nuclear reactors from any financial and legal liability. The maximum financial liability in case a nuclear accident occurs in nuclear reactors would be USD 458 million- a similar law in US has set the financial liability for such accident at USD 10.5 billion.
Moreover, the operator will have to pay INR 500 crore and the remaining amount will be paid by the Indian government. The victims will not be able to sue anyone. So foreign companies will not pay an individual’s compensation once they have paid the total of INR 500 crore.

Corporate law:
There are very few laws in the world that give immunity to the corporates. However, in India, we do not have an effective corporate liability law for either Indian or foreign companies especially in cases of ' mass disaster’ where the killing could have been anticipated but profits were counted.
 Corporate offences relating to hazardous activity like in Bhopal have already been treated as cases under civil law. In criminal law, they are not counted as cases of strict liability with the accused (including corporations) having to show a lack of fault.
 There is no law to charge MNCs who control, are in charge of or are involved in the activity or its beneficiaries.
What Union Carbide did, was to find the loopholes and evade the responsibility. Therefore, the extradition of Warren Anderson, the CEO of Union Carbide during disaster, would not help much to get an exemplary verdict.
Union Carbide got the Supreme Court (SC) to reduce the charges to causing death by negligence - and limit punishment. This is unfortunate. The charge carried a punishment of up to two years or fine, or both (section 304A). Otherwise, corporate liability would have been tested under culpable homicide amounting to murder, carrying an imprisonment for 10 years (section 304 Part II).
In 1989, the deal included exculpating Carbide from criminal proceedings altogether. Mercifully, in 1992, the SC lifted the immunity it gave to Carbide. But Union Carbide (US) denied criminal jurisdiction to India. Anderson, a prime accused in the charge sheet on 1987, was denied extradition in 2004 for the lack of more “concrete” evidence. The trial, thus, became an Indian affair, as nine other accused were Indians.

Too Little, Too Late:
Realising the growing anguish of the people, the Indian government quickly convened a meeting of the Group of Ministers to come out with an acceptable compensation package.
 The total package costs around INR 1,500 crore.
 INR 10 lakh for the dead.
 INR 5 lakh for those with permanent disability .
 INR 3 lakh for those with partial disability.
 INR 100 crore to destroy the Union Carbide plant in Bhopal and construct a memorial in its place.
 Separate INR 300-crore remediation proposal to dispose of toxic waste.
 Treatment of second and third generation people.
All companies go through constant monitoring and reviews. None can feign ignorance of potential disasters. Therefore, it is imperative to have laws that deter companies from being criminally negligent. But more than that, there is a need for an apolitical and efficient administrative and judicial set-up to enforce these laws. The lesson of Bhopal must be learnt.

What next? 4G

4G, the successor of 3G, will soon become the standard for cellular wireless. The technology is currently available in some countries but it is still being perfected. The aim is to achieve “ultra broadband speed”- to be counted in gigabytes per second-three or four times faster than 3G.

What is 4G?
When the International Telecommunication Union (ITU) designed 4G in 2002, its official name was “3G Long-Term Evolutions"or 3.9G. It will allow users to download a full-length feature film to their cellular phone, laptop or other devices within five minutes. These will also be able to stream high-definition television and radio to hand-held devices and allow users to walk from one network to the next without an interruption in reception. The International Telecommunication Union - Radio communication sector (ITU-R) has allocated new frequency wavebands to IMT (3G and 4G International Mobile Telecommunications) from 3.4GHz to 3.6GHz and 2.3GHz to 2.4GHz, respectively.
The basic difference between 3G and 4G is in data transfer and signal quality. The highest download and upload speed in 3G are 14 Mbps and 5.8 Mbps respectively, whereas in 4G the download speed is up to 100 Mbps for moving users and 1Gbps for stationary users. Another key change in 4G is the adoption of packet switching instead of circuit switching in voice and video calls. 3G technology is a combination of circuit and packet switching. Circuit switching is an old technology that ties up the resource for as long as the connection is kept up. With packet switching, resources are only used when there is information to be sent across and it allows the mobile phone company to squeeze more conversations into the same bandwidth for voice calls and video calls. All information that is passed around would be packet switched to enhance efficiency. 4G uses spiral multiplexing-an antenna system known for faster transmission and reception of data allowing better signal than that of 3G.

Evolution of 4G:
After its initial design by the ITU, the technology has undergone various changes. The first commercial LTE deployment was in the Scandinavian capitals Stockholm and Oslo by the Swedish-Finnish network operator Telia Sonera and its Norwegian brand NetCom. Telia Sonera branded the network "4G". The modem devices on offer were manufactured by Samsung (dongle GT-B3710) and the network infrastructure created by Huawei (in Oslo) and Ericsson (in Stockholm). Telia Sonera plans to roll out nationwide LTE across Sweden, Norway and Finland.

Which countries have 4G?
Except for the Scandinavian countries, a few countries have started the 4G commercially. In the US, Sprint Nextel initiated the service last year. Other countries that are expected to launch 4G by this year are Germany (the first European country to complete the bidding process), Spain, China, Japan and England.

Infrastructure for 4G :
There are three primary technologies that support 4G – WiMAX (Worldwide interpretability for microwave access), LTE (Long Term Evolution), and UMB(Ultra Mobile Broadband). But main doubt is whether to implement WiMAX or LTE, the latter being an upgradation of GSM technology. The advantages of LTE are:

• Faster speed with 100 Mbps for download and 50mbps for upload.


• It makes CDMA and GSM database moot.


• It offers both FDD (Feature Driven Development) and TDD(Test- driven development) duplexing which means that it will have lower latency, which makes real -time interaction on high bandwith application using mobile phone possible.

Many of the world’s major telecom companies like Vodafone, T-Mobile, NTT DoCoMo, China Mobile , Telecom Italia and France Telecom and vendors like Ericsson, Nortel, Alcatel-Lucent, Nokia Siemens and LG Electronics–have all announced plans to deploy LTE-based 4G networks. Some of these service providers are also planning to support both WiMAX and LTE.

WiMAX :

According to Elias Aravantinos and M. Hosein Fallah,the limitation of WiMAX technology is in wireless bandwidth which might not achieve the required rate in a high-density area thereby increasing the cost. However, as a personal broadband option, WiMAX technology becomes useful when it is bundled with IPTV (Internet Protocol television). CDMA based operator Sprint- Nextel, that has introduce 4G to the US, is relying on WiMAX. Another Chicago-based service Xohm indicated the wireless bandwidth to be excellent (roughly 3Mbps/1.5Mbps and 70ms, respectively); but this is nowhere near the +100Mbps /50Mbps that LTE promises.

4G in India?

The inevitable question is when will India get 4G? It has already begun the process of introducing 4G as the TRAI issued a pre-consultation paper few months back that advocates for quick implementation of 4G.Then should we leapfrog from 2G to 4g as we did while introducing 2G in 1995, bypassing 1G analogue system? Many think so. India is among the latecomers in 3G. It is felt that by the time the operators implement 3G fully, 4G technologies such as LTE will be available commercially.It has taken three years for the government to decide on 3G-spectrum auction policy. 4G could face the same delay unless India wants to catch up with the rest of the world.

Copyright@ Business Economics July 15 -31 2010 page 36-37