RCEP countries agree to Indian demand on services, investment negotiations

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The Economic Times | 8 November 2016

RCEP countries agree to Indian demand on services, investment negotiations

India has managed to convince all other countries involved to negotiate the Regional Comprehensive Economic Partnership (RCEP) — a proposed free trade agreement between 16 Asia-Pacific countries including China and Australia — as one package.

New Delhi’s key demand to negotiate goods, services and investments together, for which there was no commitment in the last ministerial in August, was met in the just concluded meeting of trade ministers of the 16 countries including 10 members of ASEAN plus China, Japan, South Korea, Australia, New Zealand and India.

“The ministers…underscored the urgency of a swift conclusion of the RCEP negotiations as a single undertaking, which will provide a much needed boost to confidence for the global economy,” said a joint statement from the talks held in the Philippines on November 3 and 4.

This commitment reassures India that other members will not lose interest in its demands on liberalising services trade and easing investment norms once New Delhi accepts their demands for tariff concessions on goods.

There has been concern that India has given away too much on the goods side in its other agreements without managing much on the services side where the country has a competitive edge.

RCEP is a comprehensive free trade agreement subsuming goods, services, investment, competition, economic and technical cooperation, dispute settlement and intellectual property rights

According to the joint statement, the ministers provided “strategic policy guidance to advance negotiations, especially in the core areas of trade in goods, trade in services, investment as well as other areas of negotiation”.

The thrust to include single undertaking in the ministerial declaration was high since other members had not explicitly stated their commitment towards it.

Moreover, India is also likely to have secured some way to keep tariffs high for some countries including China with which it has a large trade deficit.

These deviations will help India offer differential tariff concessions to different members of the RCEP.

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