Tanvi Apte

Growing paradiplomacy is creating a category of international transactions which do not involve nation-states, and is contributing to the already prevalent push against state centricity in international law.

The pro-investment promises of the Modi Government are no secret. Right from its 2014 campaign, the Modi Government has constantly been contesting upon the plank of increased economic benefits, specifically related to foreign investment and ease of doing business. Indeed, it is abundantly clear that the Modi Government envisions India as a global investment hub.

Arguably, even the previous UPA Government encouraged foreign investment. (Though Modi has set more ambitious targets). While that is broadly true, the difference between the two Governments lies in their respective methods of incentivising foreign investment. Specifically, unlike UPA’s comparatively centre-heavy economic policy, Modi seeks to achieve his investment-hub vision by placing his bets on “paradiplomacy.”

Growing Paradiplomacy

In the words of expert Stefan Wolff, “Paradiplomacy refers to the foreign policy capacity of sub-state entities – their participation, independent of their metropolitan state, in the international arena in pursuit of their own specific international interests.” Thus, paradiplomacy essentially involves providing increasing independence to the constituent states within a country.

In India, paradiplomacy is indeed growing by the day. In Modi’s own words, “(All) we have seen (is) a Big Brother relationship between Centre & States. A One Size Fits All approach ignores States heterogeneity. Having myself been Chief Minister, I know that states are important for growth.” Modi’s intention is thus clear – provide more international autonomy to states since they can best understand their own interest.

In fact, there is ample evidence to show the manifestation of Modi’s intention into concrete economic action. A clear trend is observable. In October 2014, a mere five months after coming into power, a “States Division” was created by the Centre within the Ministry of External Affairs to facilitate State efforts to “attract more overseas investments.” In February 2015, the Centre also accepted the 14^th Finance Committee’s Recommendations calling for a 10% increase in State Governments’ tax share. Four months later, the Department for Promotion of Industry and Internal Trade (DPIIT) released a 98-Point Assessment Report evaluating States’ business reforms. Autonomy was thus encouraged.

Capitalizing on this opportunity, in April 2015, Chandrababu Naidu headed a delegation to China wherein he signed around 13 Memoranda of Understanding [“MoUs”] mostly with the private sector. The same year saw several similar Chief Ministerial Visits – Sukhbir Singh Badal to Poland and Hungary; Devendra Fadnavis to China and Israel; Mamata Banerjee to UK– all influencing India’s foreign policy. Indeed, over the years, Chief Ministers have continued to undertake economic-agenda based foreign visits with gusto. As recently as last month, Tamil Nadu Chief Minister Palaniswami undertook a three-nation visit to attract investment.

Foreign negotiations and visits are not the only evidence of paradiplomacy – they are accompanied by “twin city agreements” and participation in international bodies. Since 2014, there have been several sister-city agreements, for instance, between Mumbai-Shanghai, Ahmedabad-Guangzhou, and Varanasi-Tokyo. Additionally, Chief Ministerial presence in international bodies like the India China Provincial Leaders’ Forum, their participation in summits like the One Belt One Road, and their practice of directly availing loans from the World Bank – all substantiate the paradiplomatic trend. Thus, all in all, constituent States have acquired increased international economy autonomy under the Modi Government.

Influencing India’s International Obligations

As a result of paradiplomacy, India’s foreign policy is no longer decided only by the Centre, but is also influenced by States. This influence is more discernible in case of border States with strong regional parties. West Bengal presents itself as an adequate example – Mamata Banerjee has a substantial say in determining India’s international obligations towards Bangladesh.  Indeed, the 2015 India-Bangladesh Land Boundary Agreement was left high and dry for several years because of Banerjee’s resistance. A similar situation has occurred in relation to the Teesta Water Sharing Agreement, which has been placed on the backburner because of the same reason. Additionally, Banerjee’s “approval” was also required for the agreement to establish haats on the Indo-Bangladesh border.

In fact, Banerjee and Bengal is again not the only example. In another instance, India controversially abstained from voting in a UNGA Resolution condemning alleged human rights violations in Sri Lanka due to pressure from the Tamil Nadu government – thereby influencing India’s state practice and opinio juris regarding its understanding of human rights violations. Further, Punjab played, and continues to play a crucial role in the negotiations between India and Pakistan regarding the Kartarpur Corridor Agreement.

The impact is clearly seen. States not only influence when India will sign a particular international treaty, they also influence the content of this treaty. In addition, the implementation of any agreement also requires support from the States. During implementation, relevant State agencies (For example, the Bombay Municipal Corporation in the Mumbai-Shanghai sister city agreement) are constantly interpreting the terms of the agreement, creating subsequent state practice. Moreover, as is seen in the Sri Lankan case, the influence of States also directly determines India’s state practice and opinio juris in multilateral institutions. Thus, State Governments’ influence on India’s international obligations (both treaty and custom) is immense. It has only increased with increased paradiplomacy, and is expected to continue, especially in the sphere of India’s regional bilateral economic relations.

Post the growth of paradiplomacy under the Modi Government, most of the of the agreements signed have been first, non-binding and second, signed between State Governments and private sector entities, like multinational corporations [MNCs]. This points towards important implications regarding [I] the nature of and [II] parties to these agreements.

I.      Implications of Nature – Possibility of More Binding Agreements

Most of the agreements signed by the State Governments are MoUs – they are not legally binding, and cannot be enforced at the international level. However, it is crucial to understand that this does not mean they are irrelevant. As argued by Richard Falk through his functional definition of law, such instruments do influence the behaviour of States; they are valuable to the extent that they perform the function of law. Hence, the contribution of paradiplomacy to international law cannot be dismissed merely because it has largely resulted in non-binding agreements.

That said, it is a very real possibility that State Governments will sign legally binding international agreements in the future, most likely in realms of economy or culture. Even today, there are prominent examples of sub-state entities signing binding agreements. For instance, in relation to its territory Macau, China has evolved a “one country two system model” that allows it control as well as provides Macau autonomy. As a consequence, today, Macau “not only conducts cross border relations, but also participates in organisations like the WTO and IMF.” Similarly, Canadian non-sovereign province Quebec also enjoys certain autonomy, in exercise of which it has signed several treaties with France. The same is true for Brazilian territory Sao Paulo. As early as 1973, Sao Paulo signed a binding international agreement with Japan. Presently, it continues to establish diplomatic relations as well as participate in international bodies. Thus, there do exist sub-State provinces signing binding agreements and influencing international law.

In tandem with these examples, it is possible that Indian States can (and should), in the near future, sign binding agreements, and contribute to a possible global trend in this direction, more so in light of increased globalisation and easy communication. Such agreements would indeed raise questions about state responsibility and enforceability in international law, and signify one possible direction in which international law might progress.

II.    Implications on Parties – Contribution to the Movement Away from State Centricity

Due to the growth of paradiplomacy under the Modi Government, there has been an increase in the number of agreements between State Governments (like Gujarat) and MNCs (like Amazon). It is interesting to evaluate the legal status of these entities presently under international law.

Presently, State Governments today are not “subjects” of international law because they are not, in Akehurst’s words, “free from the direct orders and control of another government.” Despite this, they do influence international law, and have some significance. Similarly, MNCs are also not “subjects” under international law, but do have some international personality. Just to take one instance, recently, there has been a push towards human rights obligations for MNCs through instruments like the UN Guiding Principles on Business and Human Rights. Further, MNCs can also independently approach certain international tribunals like ICSID. Thus, though both State Governments and MNCs are not traditional subjects, they cannot be discounted.

Against this backdrop, increased paradiplomacy is leading to more agreements which in turn enhances the international personality of both State Governments and MNCs. In fact, international law can no longer afford to ignore the multitude of State Government-MNC agreements, nor can it categorize them as non-international. In this manner, the narrow idea of subjecthood being strictly “statehood” is challenged since it is becoming clearer that non-state actors also influence international law. Modi’s policy is only strengthening the challenge.

Thus, growing paradiplomacy is creating a category of international transactions which do not involve nation-states, and is contributing to the already prevalent push against state centricity in international law – a push that will become only stronger in future globalised years

The Author is a third year student of NALSAR University of Law, Hyderabad