The Hindu BusinessLine | 4 January 2018
Big Asean presence on R-Day will have ripple effect on mega trade pact talks
by Amiti Sen
New Delhi: With the heads of 10 Asean countries participating in India’s Republic Day celebrations as chief guests later this month, Commerce Ministry officials fear more political pressure from the bloc on India to remove all import tariffs as part of the Regional Comprehensive Economic Partnership (RCEP) pact being negotiated.
New Delhi has been asked to submit an improved set of offers in January on market access for the other 15 countries in the RCEP: the 10 Asean nations, China, Japan, South Korea, Australia and New Zealand, However, India is undecided about how much it can expose its industry to competition.
“It is highly probable that the Asean countries will use the visit to gain some political mileage and push India towards steeper commitments on dismantling tariffs. To what extent India gives in to the pressure remains to be seen,” an official said.
The RCEP aims to be the largest free-trade bloc in the world, covering about 3.5 billion people and 30 per cent of the world’s gross domestic product.
Earlier offer rejected
While India improved upon its initial offers late last year, this was rejected by other RCEP members as they felt it was only a marginal improvement. India’s offers range between an average of 70 per cent and 80 per cent, with the maximum elimination commitment for Asean countries.
“The 10-member group is aggressively pursuing its agenda of creating a duty-free enclave. The pressure on India to agree to eliminating tariffs on more than 90 per cent of items is huge,” the official said.
Indian industry is against such huge tariff cuts, especially for China and also for countries with which there are no existing free-trade agreements, including Australia and New Zealand.
Even for Japan and South Korea, Indian industry is not keen on high market opening commitments as only a small number of obligations under the existing FTAs with these nations have been implemented.
Some room for Asean
“India at present has some space to improve offers only for the Asean countries. It is imperative to be allowed enough deviations to protect industry against other members, especially China,” the official said.
The next round of RCEP negotiations will be held in February in Indonesia when the revised offers will be discussed and members will be under more pressure for further improvement.
This will be followed by meetings of trade ministers from all the member countries to try and conclude the negotiations so that the pact can be signed in 2018.