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December 2016 International


ESCAP raised concern of high trade cost in India
United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) in its Asia-Pacific Trade and Investment Report 2016 state that international and intra regional trade costs are high in India compared to other countries of Asia Pacific.

Major facts of report

  • The services, computer software and hardware, construction development and telecommunications sectors attracted the highest investments.
  • There is decline in overseas investment which reflects that Indian investors may have started to invest in home more than abroad.
  • Report raised concern of increased trend of non tariff barriers in Asia pacific region which is mostly driven by distortive measures and current excess capacity in several sectors.
  • The Asia Pacific region is seeing a proliferation of preferential trade agreements (PTA), with Asia and the Pacific Rim contributing to almost 63% of world PTAs, curbing a momentum towards region-wide free trade.

Draft National Defence Authorisation Act,2017
The National Defence Authorization Act (NDAA) is a United States federal law specifying the budget and expenditures of the United States Department of Defence. Each year's act also includes other provisions. The U.S. Congress oversees the defence budget primarily through two yearly bills: the National Defence Authorization Act and defence bills.

  • NDAA seeks executive action to “recognise India’s status as a major defence partner of the United States.”
  • It mandates to “designate an individual within the executive branch who has experience in defense acquisition and technology” to ensure the success of bilateral defence ties and “to help resolve remaining issues impeding” them.
  • It also calls for “strengthening the effectiveness of the U.S.-India Defence Trade and Technology Initiative and the durability of the Department of Defence’s “India Rapid Reaction Cell,” a special unit that reviews ties with India.
  • The U.S has already recognised India as a “major defence partner” in June, during Prime Minister Narendra Modi’s visit, but the implications of it remains undefined.

Venezuela suspended from MERCOSUR

  • South American regional economic group Mercosur has notified that Venezuela's membership has been suspended for violating the bloc's democratic principles.
  • Founding members Argentina, Brazil, Paraguay and Uruguay reached the decision to revoke the Mercosur membership of Venezuela, which is in the midst of an economic collapse despite holding the world's largest oil reserves.

Why suspended

  • Mercosur accepted Venezuela as a member when South America was dominated by Leftist governments in an effort to link the region’s biggest agricultural and energy markets.
  • But Venezuela has fallen afoul of its neighbours as it has cracked down on the opposition and conservative governments have assumed power in Argentina and Brazil.
  • It has failed to meet economic, human rights and immigration accords governing the group.

Heart of Asia conference adopts 'Amritsar Declaration' 

  • The Sixth Ministerial Conference on Heart of Asia- Istanbul process of Afghanistan adopted the Amritsar declaration, which puts focus on the concerned countries to address terrorism and enhancing regional economic cooperation. 
  • The three big issues of the conference were- countering terrorism to create stability in Afghanistan, providing Afghanistan connectivity to strengthen economic activities and the development which is essential for its progress 
  • For the first time, a Heart of Asia conference expressed concern over violence caused in Afghanistan and the region by terrorists groups like 
  • Al Qaeda, Daesh, Lashkar-e-Toiba and Jaish-e-Mohammed.
  • The declaration states the urgency to respond to the nexus between drug menace and its financial support for terrorist entities in Afghanistan. "To disrupt these links, the Heart of Asia countries intend to increase dialogue between their relevant ministries and agencies to tackle this menace 
  • The declaration welcomes the MOU on Jointly Building the Silk Road Economic Belt and the 21st Century Maritime Silk Road between China and Afghanistan. 

BRICS nations vow to automatic sharing of tax information

  •  BRICS nations, including India, pledged to share tax information automatically and adopt global standards on tax transparency to check cross border tax evasion.
  • Group also resolved to support other developing nations in increasing their tax administrations’ capacity to implement the OECD/G20 standard on Automatic Exchange of Information (AEOI).

Other key facts

  • They urged timely and consistent implementation of the Base Erosion and Profit Shifting Project across as many tax jurisdictions as possible and appealed to all countries to join the framework and participate in the BEPS project.
  • The OECD/G20 project on BEPS provides governments with solutions for closing the gaps in existing international rules that allow corporate profits to artificially shift to low or no-tax environments, where little or no economic activity takes place
  • They reiterated their commitment to actions taken to ensure the fairness of the international tax system particularly towards prevention of base erosion and shifting of profits, exchange of tax information and capacity building of developing countries.

Base erosion and profit shifting (BEPS) refers to tax avoidance strategies that exploit gaps and mismatches in tax rules to artificially shift profits to low or no-tax locations.

India, US finalise Major Defence Partner agreement
Defence Minister Manohar Parrikar and United States Secretary of Defence Ashton Carter Thursday finalised India’s designation as a Major Defense Partner of the United States. This was announced in the India-US joint statement on Carter’s visit to New Delhi.

What does that mean
The designation as a Major Defense Partner, the joint statement noted, is a status unique to India and institutionalises the progress made to facilitate defence trade and technology-sharing with India to a level at par with that of the United States’ closest allies and partners, and ensures enduring cooperation into the future.

India’s Major Defense Partner status has, however, been made a part of the India Amendment in the National Defense Authorization Act, 2017 (NDAA), approved by the US Congress to allocate funds annually to the US military. This Bill is expected to be passed shortly which will put a formal, official stamp on India’s status.

Under the India Amendment in the NDAA 2017, the US government will, consistent with its conventional arms transfer policy, inform the review of requests to export defence articles, defence services, or related technology to India under the Arms Export Control Act, and inform any regulatory and policy adjustments that may be appropriate

The India Amendment will designate an American official to ensure the success of the Framework for the United States-India Defense Relationship which was signed last year, to approve and facilitate the transfer of advanced technology, and to strengthen the effectiveness of the US-India Defense Trade and Technology Initiative and the durability of the India Rapid Reaction Cell in Pentagon.

Any concern

  • While the Obama administration had committed to each of these actions, there were concerns that the incoming Trump administration could do away with these India-specific provisions.
  •  New Delhi had, therefore, been insisting on some institutional mechanisms to safeguard the gains made over the past two years. The passage of the India Amendment will make it obligatory for the Trump administration to adhere to these commitments.

India, Vietnam sign nuclear pact, three other agreements

  • In a significant development, India and influential East Asian nation Vietnam  signed a civil nuclear cooperation agreement.
  • The two countries also signed three other agreements — to enhance aviation links, to jointly work in the area of energy efficiency and promotion of parliamentary cooperation.
  • The civil nuclear agreement with Vietnam, an influential East Asian nation, comes close on the heels of India signing a similar pact with Japan.
  • Vietnam is the 14th country with which India signed the civil nuclear deal.


  • The two countries had earlier in 1986 signed a pact in the civil nuclear field which was limited to training. However, the new agreement is broadbased and encompasses research on nuclear reactors, sources said.
  • The cooperation in research on nuclear reactors will get activated once India gets membership of the Nuclear Suppliers Group

Kolkata-Mizoram trade route to open via Myanmar
A deep water port built in Myanmar’s Sittwe on the Bay of Bengal by India is ready to be commissioned.

About port

  • The link was conceived by the Manmohan Singh government and work began in 2010. As with other Indian infrastructure ventures in Myanmar, though, the completion target of 2013 was missed.
  • Sittwe is the capital of Rakhine State (which has been in the news for the plight of Rohingya Muslims) in south-western Myanmar. It is located at the mouth of the Kaladan river, which flows into Mizoram in north-eastern India.
  • Construction of the sea port is the first phase of an integrated $500-million project being funded by a long-term interest-free loan provided by India. Dredging of the river and inland water terminals are included in the plan.

How this is a significant achievement

  • India has for years sought transit access through Bangladesh to ship goods to the landlocked north-eastern States. At present, the only route to this region from the rest of India is a rather circuitous one through a narrow strip of Indian territory nicknamed the Chicken’s Neck in West Bengal, sandwiched between Bhutan and Bangladesh.
  • The strategic advantage would be that it would significantly lower the cost and distance of movement from Kolkata to Mizoram and beyond. Once shipments arrive at Sittwe, they will be transferred to smaller freight carriers which would sail upstream into Mizoram Nevertheless, the port when unveiled will serve to make a statement in a country long dominated by China.

Antonio Guterres sworn in as UN secretary-general

  •  Former Portuguese Prime Minister Antonio Guterres was sworn in as Secretary-General of the United Nations, becoming the ninth U.N. chief in the body’s 71-year history.
  • The selection of a new secretary-general had traditionally been decided behind closed doors by a few powerful countries. But this year, the process involved public discussions with each candidate who was campaigning for the job.
  • U.N. chiefs are charged with promoting sustainable development, working for peace around the globe, protecting human rights and dealing with humanitarian catastrophes.

Selection procedure

  • Article 97 of the United Nations Charter, states "The Secretary-General shall be appointed by the General Assembly upon the recommendation of the Security Council". 
  •  As a result, the selection is subject to the veto of any of the five permanent members of the Security Council.
  • Traditionally, candidates from the permanent members of the Security Council are not considered for the position of Secretary-General to avoid further concentration of power within the United Nations.

After Pak General, Chinese media suggests India to join CPEC
Chinese official media said and suggested India to accept the "olive branch(CPEC)" extended by a top Pakistani military General to participate in the USD 46 billion economic corridor.

Major key facts

  •  It said that India could boost its exports and slash its trade deficit with China via new trade routes that would be opened up by the CPEC.
  • In addition, the northern part of India bordering Pakistan and Jammu and Kashmir will gain more economic growth momentum if India joins the project.
  • The CPEC is not only a bilateral cooperation, but also a multilateral project in the long-run, which aims at regional economic integration. So it's open and inclusive, and China and Pakistan hope India along with Afghanistan, Iran and Central Asian countries can participate and become stakeholders.

About CPEC

  • CPEC is an economic corridor which aims to facilitate trade along an overland route that connects Kashgar and Gwadar, through the construction of a network of highways, railways, optical fibre and pipelines.
  • The corridor is intended to rapidly expand and upgrade Pakistani infrastructure, as well as deepen and broaden economic links between Pakistan and the People's Republic of China
  • It is considered to be an extension of China's ambitious One Belt, One Road initiative, and the importance of CPEC to China is reflected by its inclusion as part of China's 13th five-year development plan.


Q1.Conider the following statement regarding Heart of Asia.
1. It was established to provide a platform to discuss regional issues, particularly among Afghanistan and its neighbours. 
2. India is a key member of this platform
3. In the recently held summit Delhi declaration was adopted which puts focus on the concerned countries to address terrorism and enhancing regional economic cooperation. 
4.    This region-led dialogue was launched in November 2011.
Choose the correct option
a)Only 1,2,3                b)Only 3,4
c)Only 1,2,4                d)All

Q2.Which of the following is/are correct regarding China Pakistan Economic Corridor(CPEC).
1.    It aims to facilitate trade along an overland route that   connects       Kashgar  and Gwadar.
2.    It facilitates one mode of transportation.
3.    India has presented its desire to become a participant in the construction.
Choose the correct option:
a)Only 1            b)Only 2,3
C)Only 2            d)Only 1,2,3


Q1.c              Q2.a


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