Regional Comprehensive Economic Partnership

 

For: Mains

Topics covered:

• Why did India refuse to sign the Regional Comprehensive Economic Partnership?
• What is the Regional Comprehensive Economic Partnership?
• What are the unresolved issues?

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News Flash

After seven years, RCEP negotiations started in 2012, have concluded in Bangkok. India chose to hold off on signing the Regional Comprehensive Economic Partnership (RCEP) until “significant outstanding issues” were settled.

 

What is the Regional Comprehensive Economic Partnership?

The RCEP is a  trade deal that was being negotiated between 16 countries (10 ASEAN members + 6 countries with which the bloc has free trade agreements). The purpose of the deal is to create an “integrated market” spanning all 16 countries.

 

What is the problem?

Except for India, all the RCEP participating countries have “concluded” text-based negotiations for all the proposed deal and they are expected to be ready to ink the pact in 2020.

 

India’s Unresolved Issues:

• Key issues include “inadequate” protection against surges in imports as its industry has fears that cheaper products from China would “flood” the market. India had been seeking a mechanism that would allow India to raise tariffs on products in instances where imports cross a certain threshold.
• India has also not received any credible assurances on its demand for more market access, and its concerns over non-tariff barriers. RCEP participants like china, in the past, is known to have used non-tarrif barriers to prevent India from growing its exports to the country.
• India had also reportedly expressed apprehensions on lowering and eliminating tariffs on several products from the country.
• India also had a concern on the criteria which is used to determine the national source of a product. The current provisions in the deal do not prevent countries from routing, through other countries, products on which India would maintain higher tariffs. This is anticipated to allow countries like China to pump in more products.
• Concerns over “unsustainable trade deficits” also needed to be addressed.
• India already having separate, bilateral Free Trade Agreements with most RCEP nations, it has recorded trade deficits with these countries.
• During negotiations, it was also not able to get a favourable outcome on its demands on the base year that would be used to reduce the tariffs on the products that would be traded as part of the pact. India had sought to safeguard the interests of its domestic industry through measures like seeking a 2014 base year for tariff reductions instead of 2013, when negotiations on RCEP began, as it has raised import duties on several products between 2014 and 2019. Using a base year before 2014 would mean a drastic drop in the import duties on these products.
• Several sections of the Indian industry have raised concerns that some domestic sectors may take a hit due to cheaper alternatives from other participant countries. Eg, the dairy industry was expected to face stiff competition from Australia and New Zealand.

 

Important Information

• ASEAN members – Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam
• Six countries in which the bloc has FTA – India, Australia, China, Korea, Japan, and New Zealand.

 

Source: Indian Express

 

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