PERIYAR IAS CURRENT AFFAIRS 12-MAY-2018

Topic: Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.

NAFTA

Context: Negotiators have failed to reach NAFTA deal. Negotiators have ended talks without a deal to modernize NAFTA, agreeing instead to resume negotiations soon, ahead of a deadline next week issued by U.S House of Representatives. The failure to secure a quick deal underscores uncertainty over the North American Free Trade Agreement.

Background:

President Donald Trump has pledged to begin renegotiating the North American Free Trade Agreement (NAFTA) in upcoming talks with the leaders of Mexico and Canada. Trump has called NAFTA the “worst trade deal in history,” and blames it for the loss of manufacturing jobs in America’s Rust Belt. He has pledged to negotiate “tough and fair” trade agreements with the goal of creating more U.S. jobs as a top goal.

What is NAFTA?

NAFTA is the initialism for the North American Free Trade Agreement, an agreement signed by Canada, Mexico, and the United States that reduced or eliminated trade barriers in North America. (Since the U.S. and Canada already had a free trade agreement (signed in 1988), NAFTA merely brought Mexico into the trade bloc.)

Negotiations for the trade agreement began in 1990 under the administration of George H.W. Bush and were finalized under Bill Clinton’s presidency in 1993. The agreement went into effect on January 1, 1994.

What was the purpose of NAFTA?

§  In 1993 the European Union (EU) created a “single market”—one territory without any internal borders or other regulatory obstacles to the free movement of goods and services. This allowed every country and business in the EU to have access to more than 500 million consumers.

§  NAFTA, which was approved that same year, was designed to have a similar effect, providing a way to allow the exchange of goods and services to flow more freely across national borders without the artificial restrictions.

§  NAFTA provided for progressive elimination of all tariffs on any goods qualifying as North American. The deal also sought to protect intellectual property, establish dispute-resolution mechanisms, and, through corollary agreements, implement labor and environmental safeguards.

Why is NAFTA controversial?

NAFTA was controversial when first proposed, mostly because it was the first [free trade agreement] involving two wealthy, developed countries and a developing country. Some people felt that allowing free trade with a developing country provides an incentive for U.S-based business to move their operations to that country.

Since its implementation NAFTA has remained a prime target of trade protectionists (those who advocate taking measures such as taxing imports to “protect” domestic industries from foreign competition).

What’s important?

§  For Prelims: NAFTA.

§  For Mains: Issues related to NAFTA and Why is US against the deal.

Sources: the hindu.

---

Topic: Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.

A global environment compact

Context: The UN General Assembly has adopted a resolution to set up a working group for negotiations aimed at creating a Global Pact for the Environment, a legally binding international instrument.

About the resolution:

§  The resolution requests UN Secretary-General Antonio Guterres to submit to the General Assembly a report that identifies and assesses possible gaps in international environmental law and environment-related instruments with a view to strengthening their implementation.

§  It decides to establish an ad hoc open-ended working group to consider the report, and if deemed necessary, to consider the scope, parameters and feasibility of a Global Pact for the Environment.

§  The resolution requests the current president of the General Assembly to appoint two co-chairs of the working group — one from a developing country and one from a developed country — to oversee its consultations.

Key facts for Prelims:

§  The resolution was sponsored by France and won the support of 143 countries.

§  Iran, the Philippines, Russia, Syria, Turkey and the United States voted against it.

§  Six other countries abstained while several states did not vote.

Sources: the hindu.

---

Topic: Important International institutions, agencies and fora, their structure, mandate

.

World Migratory Bird Day 2018

Context: World Migratory Bird Day 2018 is being celebrated on May 12^th this year.

World Migratory Bird Day 2018 theme: “Unifying Our Voices for Bird Conservation”.

About World Migratory Bird Day:

World Migratory Bird Day is celebrated each year to highlight the need for the conservation of migratory birds and their habitats. More than 300 events in more than 60 countries to mark World Migratory Bird Day 2018 will include bird festivals, education programmes, media events, bird watching trips, presentations, film screenings and a benefit concert to raise funds for international nature conservation.

Concerns:

Forty percent of all migratory birds are seeing their number in decline, with one in eight being threatened with global extinction. Major threats include habitat loss and degradation, collision with badly placed wind turbines and power lines, unsustainable harvesting and the illegal killing and taking of birds.

Conservation of migratory species:

Efforts to conserve migratory birds both globally and regionally are internationally coordinated by the Convention on the Conservation of Migratory Species of Wild Animals (CMS, also known as the Bonn Convention) and the Agreement on the Conservation of African-Eurasian Migratory Waterbirds (AEWA). The two UN Environment-administered treaties have been spearheading World Migratory Bird Day since 2006.

About the Convention on Migratory Species (CMS):

The Convention on the Conservation of Migratory Species of Wild Animals aims to conserve terrestrial, aquatic and avian migratory species throughout their range. CMS and its related Agreements on migratory birds bring together governments and other stakeholders to coordinate and further develop conservation policies, to ensure that all flyways in the world benefit from coordination mechanisms that promote cooperation at ground level among the countries involved. It is under aegis of United Nations Environment Programme (UNEP).

About the African-Eurasian Migratory Waterbird Agreement (AEWA):

The Agreement on the Conservation of African-Eurasian Migratory Waterbirds (AEWA) is an intergovernmental treaty dedicated to the conservation of migratory waterbirds that migrate along the African-Eurasian Flyway. The Agreement covers 254 species of birds ecologically dependent on wetlands for at least part of their annual cycle.

What’s important?

For Prelims and Mains: WMBD, CMS and AEWA.

Sources: toi.

---

Topic: Important International institutions, agencies and fora, their structure, mandate.

Islamic Cooperation countries (OIC)

Context: Russia has come in support of Organization of Islamic Cooperation countries (OIC) in their effort to enter the Russian market.

Background:

Russia’s trade turnover with OIC countries stands at about $75 billion, with exports accounting for about $58 billion. Imports from OIC countries total about $17 billion.

About the OIC:

§  Organisation of Islamic Cooperation is an international organization founded in 1969, consisting of 57 member states. It is the second largest inter-governmental organization after the United Nations.

§  The organisation states that it is “the collective voice of the Muslim world” and works to “safeguard and protect the interests of the Muslim world in the spirit of promoting international peace and harmony“.

§  The OIC has permanent delegations to the United Nations and the European Union.

What’s important?

For Prelims and Mains: OIC.

Sources: et.

---

Paper 3:

Topic: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

Prompt corrective action

Context: Reserve Bank has initiated prompt corrective action against public sector lender Dena in view of high non-performing loans, restricting the bank from giving fresh credit and new hiring.

What is PCA?

PCA norms allow the regulator to place certain restrictions such as halting branch expansion and stopping dividend payment. It can even cap a bank’s lending limit to one entity or sector. Other corrective action that can be imposed on banks include special audit, restructuring operations and activation of recovery plan. Banks’ promoters can be asked to bring in new management, too. The RBI can also supersede the bank’s board, under PCA.

When is PCA invoked?

The PCA is invoked when certain risk thresholds are breached. There are three risk thresholds which are based on certain levels of asset quality, profitability, capital and the like. The third such threshold, which is maximum tolerance limit, sets net NPA at over 12% and negative return on assets for four consecutive years.

What are the types of sanctions?

There are two type of restrictions, mandatory and discretionary. Restrictions on dividend, branch expansion, directors compensation, are mandatory while discretionary restrictions could include curbs on lending and deposit. In the cases of two banks where PCA was invoked after the revised guidelines were issued — IDBI Bank and UCO Bank — only mandatory restrictions were imposed. Both the banks breached risk threshold 2.

What will a bank do if PCA is triggered?

Banks are not allowed to re new or access costly deposits or take steps to increase their fee-based income. Banks will also have to launch a special drive to reduce the stock of NPAs and contain generation of fresh NPAs. They will also not be allowed to enter into new lines of business. RBI will also impose restrictions on the bank on borrowings from interbank market.

Impact:

Small and medium enterprises will have to bear the brunt due to this move by RBI. Since the PCA framework restricts the amount of loans banks can extend, this will definitely put pressure on credit being made available to companies especially the MSMEs. Large companies have access to the corporate bond market so they may not be impacted immediately. It has been predicted that if more state-owned banks are brought under PCA, it will impact the credit availability for the MSME segment.

What’s important?

§  For Prelims: PCA.

§  For Mains: PCA- need, significance, sanctions and challenges.

Sources: the hindu.

---

Topic: Awareness in space.

NASA Mars Helicopter

Context: NASA is planning to send a small helicopter to Mars as part of the space agency’s 2020 mission to place a next-generation rover on the Martian surface, marking the first time such an aircraft will be used on another world.

The mission:

§  The Mars Helicopter, a small, autonomous rotorcraft, will travel with the agency’s Mars 2020 rover mission, currently scheduled to launch in July 2020, to demonstrate the viability and potential of heavier-than-air vehicles on the Red Planet.

§  The helicopter also contains built-in capabilities needed for operation at Mars, including solar cells to charge its lithium-ion batteries, and a heating mechanism to keep it warm through the cold Martian nights. But before the helicopter can fly at Mars it has to get there. It will do so attached to the belly pan of the Mars 2020 rover.

§  As a technology demonstration, the Mars Helicopter is considered a high-risk, high-reward project. If it does not work, the Mars 2020 mission will not be impacted. If it does work, helicopters may have a real future as low-flying scouts and aerial vehicles to access locations not reachable by ground travel.

Mars 2020:

Mars 2020 will launch on a United Launch Alliance (ULA) Atlas V rocket from Space Launch Complex 41 at Cape Canaveral Air Force Station in Florida, and is expected to reach Mars in February 2021.

The rover will conduct geological assessments of its landing site on Mars, determine the habitability of the environment, search for signs of ancient Martian life, and assess natural resources and hazards for future human explorers. Scientists will use the instruments aboard the rover to identify and collect samples of rock and soil, encase them in sealed tubes, and leave them on the planet’s surface for potential return to Earth on a future Mars mission.

Sources: et.