RCEP asks India to make up its mind on staying in group

NEW DELHI: Members of the Regional Comprehensive Economic Partnership (RCEP) have asked India to decide if it wants to remain a part of the proposed trade grouping, as pressure mounts to conclude the deal this year.
The demand came amid discussions India immediately eliminating tariffs on more than a fourth of traded goods once the agreement comes into force. RCEP includes China, with which India has a burgeoning trade deficit. “Some countries have asked India to make up its mind if it wants to stay in the grouping,” an official aware of the negotiations said.

Talks were on for India to immediately eliminate tariffs on 28% of the traded goods and more than 35% of the goods in phases. Another official said, “Nothing is decided on tariff cuts for China as yet. That is still uncertain.” India is likely to extend the steepest tariff cuts to the Asean and most conservative offers to China. India’s trade deficit with China – $53.6 billion in FY19 – is feared to widen if the pact is inked.

With other non-free trade agreement (FTA) partners — Australia and New Zealand — there are competing interests in agriculture, horticulture and dairy that are sensitive for India. “These are pressure-building tactics for India to give up its interests and conclude the pact soon,” said a New Delhi-based expert on trade issues. In India, there is apprehension among government departments and industry that a trade deal on the current terms will lead to China dumping goods in India. The ministries of steel, agriculture and chemicals, and executives of industries such as dairy, steel, copper, textiles, aluminium, engineering, pharmaceuticals, leather and food, have expressed their reservations.

Separately, a round of discussions on investment issues is likely due to lack of convergence on the crucial subject. India’s proposal on investor-state dispute settlement — advocating exhaustion of local remedies before an investor can take the state for a dispute — had found support from ASEAN and New Zealand. India has been opposing it strongly at RCEP, fearing loss of sovereignty due to third-party arbitration in a backlash similar to Cairn and Vodafone. “Attended the plenary session of the 7th RCEP Ministerial Meeting in Bangkok today,” commerce and industry minister Piyush Goyal tweeted on Sunday.

Negotiations on the agreement are in the final stages in Bangkok. “India holds a significant place in the global economy and its role in the discussion will provide for stable growth in trade and investments,” he said in the tweet. The Prime Minister’s Office was briefed last week about RCEP, whose negotiations began in November 2012.

CRITICAL MILESTONE
RCEP has said developments in the global trade environment may affect their individual positions as talks reach a “critical milestone.” “The ministers recognised that negotiations have reached a critical milestone as the deadline for conclusion of negotiations draws near,” members said in a joint statement issued after the ministerial meeting on Sunday. They also noted that “certain developments in the global trade environment may affect” countries’ individual positions in the course of the negotiations.