Live Mint | 25 July 2016
RCEP faces services logjam; India pushes for liberalized visa regime
by Asit Ranjan Mishra
New Delhi: The 16-member Regional Comprehensive Economic Partnership (RCEP) trade talks have hit a hurdle, with India insisting on liberalized visa regime for movement of professionals across borders while other countries refuse to budge.
A crucial RCEP ministerial in Laos on 5 August will now find a way out of the logjam as a pre-ministerial meeting on 18-19 July in Jakarta failed to reach a consensus on the matter. However, participation of India’s trade minister Nirmala Sitharaman in the meeting remains doubtful, given the ongoing monsoon session of Parliament.
“Negotiations have entered a difficult stage. There is some amount of logjam that the ministerial will now address. A range of options have been determined, out of which the ministers need to reach a consensus on any one. Now, the impasse can only be resolved through a political call,” a commerce ministry official said, speaking under condition of anonymity.
The official said one of the contentious issues is whether there will be negotiations on movement of natural persons, or Mode 4 in World Trade Organization parlance. “The Asean (Association of Southeast Asian Nations) grouping has made it clear that they don’t want to do it at this stage. Only India and, to some extent, Australia are pushing for negotiations in Mode 4,” he said.
India has made a further increase in its offers in goods conditional to other member countries agreeing to a higher level of commitment in trade in services.
India wants more sectors to be covered in services, liberalization benchmarks in each mode of services and opening up Mode 4.
India has little to gain in getting market access in goods in other countries due to its poor infrastructure and weak manufacturing base, but it thinks it has an upper hand in services negotiations.
India hopes to acquire market access for its burgeoning skilled professionals and easier visa regimes in the RCEP member countries.
However, liberalization of trade in services remains a contentious issue for other member countries, with most showing reluctance to open up their labour market.
Biswajit Dhar, professor of economics at the Jawaharlal Nehru University, said India cannot do wholesale liberalization in services as services liberalization isn’t about Mode 4 only and India has its sensitivities in areas such as financial services, higher education and legal services. “India should press for delaying greater market access commitments in goods to kick in. It should also piggyback on the provision of economic and technical cooperation in RCEP mandate for negotiating a better deal to meet its own development gap,” he added.
India has offered tariff cuts in a three-tier system under which it has given 80% tariff cuts to Asean countries, 65% to South Korea and Japan and finally 42.5% tariff liberalization for China, Australia and New Zealand with which it does not have any free-trade agreement. Countries like Japan are seeking to have common concessions for all member countries after a period of 10 years which India is opposed to.
Started in May 2013, RCEP comprises the 10 economies of the Asean region (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam) and six of its free trade partners (Australia, China, India, Japan, New Zealand and South Korea).
The grouping envisages regional economic integration, leading to the creation of the largest regional trading bloc in the world, accounting for nearly 45% of the world’s population with a combined gross domestic product of $21.3 trillion.
The regional economic pact aims to cover trade in goods and services, investment, economic and technical cooperation, competition and intellectual property. India’s interests lie mostly in services, the removal of technical barriers to trade such as those taken under sanitary and phyto-sanitary measures, and trade in goods such as pharmaceuticals and textiles.