Current Affairs July 16, 2023: India’s Deep Ocean Mission, CPTPP, Non-Fungible Token

Central Indian Ocean Basin (CIOB)

• CIOB is in the central part of the Indian Ocean. It is situated between 25°S and 5°N and 70°E and 90°E.
• The Indian Peninsula borders it to the northwest, the Sunda Shelf to the southeast, and the Mid-Indian Ridge to the southwest.
• CIOB is primarily a result of tectonic activity associated with the Indian Plate. It is part of a larger region known as the Indian Ocean Triple Junction, where three major tectonic plates, the Indian Plate, Australian Plate, and Somali Plate, converge.
• The region is rich in polymetallic nodules of nickel, copper, cobalt and manganese.
• India was the first country to receive the status of a ‘Pioneer Investor‘ in 1987 and was given an area of about 1.5 lakh sq km in the CIOB for nodule exploration.
• In 2002, India signed a contract with the ISA, and after a complete resource analysis of the seabed, 50% was surrendered, and the country retained an area of 75,000 sq km.

Samudrayan

• Samudrayan is India’s first manned ocean mission.
• It is launched in 2021 as a part of the Deep Ocean Mission. With this, India joined the club of the USA, Russia, Japan, France and China, which have underwater vehicles for subsea activities.
• Samudrayan will carry out deep ocean exploration of the non-living resources, such as polymetallic manganese nodules, gas hydrates, hydro-thermal sulphides and cobalt crusts, located at a depth between 1000-5500 m.
• Under this mission, the manned submersible MATSYA 6000 is indigenously built with the help of ISRO, the Indian Institute of Tropical Meteorology (IITM) and the DRDO.

The United Nations Convention on Law of the Sea (UNCLOS)

• UNCLOS establishes general obligations for safeguarding the marine environment and protecting the freedom of scientific research on the high seas.
• It can hold states liable for damage caused by violation of their international obligations through its three institutions:
  1. International Tribunal for Law of Sea,
  2. International Seabed Authority (ISA), and
  3. Commission on the limits of the continental shelf.
• The convention gives a clear definition on Internal Waters, Territorial Waters, Contiguous Zone, Exclusive Economic Zone and Continental Shelf.
• It provides rights to landlocked states for access to and from the sea without taxation of traffic through transit states.

International Seabed Authority (ISA)

• ISA is a Jamaica-based autonomous intergovernmental body established under the 1982 UN Convention on the Law of the Sea (UNCLOS) and its 1994 Agreement on Implementation.
  • UNCLOS creates a legal regime for controlling resource exploitation in deep-seabed areas beyond national jurisdiction through the International Seabed Authority.
• Members: It has 167 member states and the European Union. India is a member.

Clarion-Clipperton Zone (CCZ)

• CCZ, also known as Clipperton Fracture Zone, is a geological submarine fracture zone in the northern Pacific Ocean.
• It is being researched for deep-sea mining due to the abundant presence of manganese nodules.
• It is a habitat for cetaceans, including blue whales (EN), baleen, and toothed whales.

Free Trade Agreement (FTA)

• An FTA is a pact between two or more nations to reduce barriers to imports and exports among them.
• Under a free trade policy, goods and services can be bought and sold across international borders with minimal government tariffs, quotas, subsidies, or prohibitions to inhibit their exchange.
• In an FTA, the countries agree on certain obligations such as investor protections, intellectual property rights, anti-dumping, etc.
• For the developed nations, the main goal of FTAs is to reduce barriers to exports, protect interests competing abroad, and enhance the rule of law in the FTA partner country or countries.
• For developing nations, the main goal is to protect against dumping and anti-competitive trade practices while promoting exports.

Trans-Pacific Partnership (TPP)

• The Trans-Pacific Partnership (TPP) was a proposed FTA between twelve Pacific Rim economies: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, NZ, Peru, Singapore, Vietnam, and the US.
• TPP was initially touted to be path-breaking for free trade but fizzled out with the withdrawal of the US.
• The remaining countries negotiated the CPTPP, which incorporates most of the provisions of the TPP.

Regional Comprehensive Economic Partnership (RCEP)

• RCEP is an FTA among the Asia-Pacific nations of Australia, Brunei, Cambodia, China, Indonesia, Japan, South Korea, Laos, Malaysia, Myanmar, NZ, the Philippines, Singapore, Thailand, and Vietnam.
• While the US spearheaded TPP negotiations, China pushed for RCEP.

India’s concerns that led to the withdrawal from RCEP

• India (a protectionist nation with high tariffs) withdrew from RCEP negotiations in 2019.

Cheaper imports and Widening Trade Deficit

• India feared domestic sectors like steel, textiles, farm, dairy, etc., would be hit by cheaper alternatives from other RCEP countries that employ cheaper and more efficient industry processes.

Farm sector is not excluded

• India has excluded agriculture from import liberalisation, both in the WTO and bilateral FTAs.
• But RCEP was hell-bent on bringing even the farm sector under import liberalisation.

Why the Dairy sector vehemently opposes FTAs like RCEP?

• Global dairy trade occurs not in milk but in its solid derivatives like milk powder, butter and cheese.
• The MNC firms operating in India are forced to buy milk from Indian farmers as India’s dairy imports are low due to high tariffs, especially on milk powder (60%) and fats (40%).
• FTAs like RCEP will make milk imports cheaper, and MNC firms will prefer importing milk products from New Zealand or Australia rather than buying from India.
• 5% of New Zealand’s exports in the dairy sector is enough to flood India’s domestic market.
• While 70 million households depend on the dairy sector in India, the number is just 10,000 in New Zealand (a temperate country with ideal conditions for dairy farming).

FTAs are essential for Global Value Chain (GVC)

• A global value chain (GVC) is the series of stages in producing a product or service.
• The GVCs exploit hyper specialisation for greater efficiencies.
• They do so by breaking down the production process across countries.

Explanation

• The common notion of international trade is that one country exports product X to the second country and imports product Y from the second country.
• However, due to an increased level of fragmentation and optimisation of the production process, this is not how most of the trade happens.
• Product X is never entirely made in the first country. Instead, the production cycle involves half-made goods crisscrossing a country’s borders — sometimes as exports and at other times as imports.
• The final product may be given the last touch in the first country, but the “value chain” involves trading across several national boundaries.

Example of Global Value Chain

• The mechanical parts of German-made vehicles are manufactured in Germany as German engineers are masters at the craft of efficient manufacturing.
• However, the electronics for the vehicle are imported from Chinese, Taiwanese or South Korean firms as these countries are pioneers of electronics manufacturing.
• And the software for the vehicles is designed in Indian software hubs like Bengaluru.
• The final product is assembled in Germany or any other country and exported worldwide.

Why integrating into the Global Value Chans is essential?

• Productivity and incomes rose in countries that became integral to GVCs — Bangladesh, China, and Vietnam, among others. The steepest declines in poverty occurred in precisely those countries.
• GVCs allow resources to flow to their most productive use, not only across countries and sectors but also within sectors across stages of production. As a result, GVCs magnify growth and employment.

What is India’s participation in GVCs?

• India’s integration with GVCs is among the lowest in G20 countries.
• India cannot miss out on being a part of GVCs, which can happen only if tariffs are reduced.
• It should work on reducing its dependence on agriculture for employment generation by squeezing itself into the GVCs through FTAs like RCEP to boost manufacturing.

Blockchain

• A blockchain is a digital distributed ledger that records every data (transaction) in blocks linked together using cryptography (a technique of securing communication using encryption).
• A distributed ledger stands in contrast to a centralised ledger, where the database is owned and controlled by a single or a closed group of entity/entities.
• A centralised ledger is more prone to cyber-attacks and fraud, as it has a single point of failure.

The Meaning of ‘Distributed Ledger’ in Blockchain Technology

• Ledger in accounting means a record of transactions, accounts, statements, etc. A ledger in blockchain means a database.
• A distributed ledger is a decentralised and shared database synchronised across multiple devices, locations and geographies and accessible to every participant (node) within the network.
• The participant (node) of the network can access the recordings of the ledger and can keep a copy of it.
• Any changes made to the ledger are reflected and copied to all participants in seconds.
• A distributed public ledger (e.g., bitcoin) is accessible to everyone connected to the internet.

Block in a Blockchain

• Blockchain technology was first used within Bitcoin.
• Bitcoin is a form of a digital distributed public ledger where records take the form of transactions.
• A block is a collection of these transactions/records.
• The block eventually is filled as more records (transactions) are added.
• Once complete, the blocks are added to the blockchain in a linear, chronological order.
• So, blockchain is a digitally distributed (public or private) ledger that records every transaction in a linear, chronological order in a cryptographically linked chain of blocks.

The Blockchain is Immutable

• Immutable: impossible to change/delete any data once recorded and accepted.
• Immutability, in the context of the blockchain, means that once something has been entered into the blockchain, it cannot be tampered with.
• A block in a blockchain stores both the block’s and the previous block’s hash (a unique identifier).
• The hash is a one-way cryptographic value derived from the transaction data, the previous block’s hash value, and other parameters.

• Even if a single transaction is tampered with, or if any of the block’s parameters are changed even by a single digit, the block’s hash will change completely.
• This breaks the link with the next block since the block’s hash is the chain’s vital link.
• Hence it is impossible to tamper with a block without altering the subsequent blocks.
• Since the blockchain is hosted by millions of computers (nodes) simultaneously, it is next to impossible to alter all the copies unless 51% of the nodes approve it, which is, again, simply impractical.