India can breathe easy for now as RCEP deal deferred to 20192 min read . Updated: 15 Nov 2018, 08:36 AM IST
Delhi was reluctant for early conclusion of negotiations, given the upcoming general election next year
New Delhi: Leaders of the 16 Regional Comprehensive Economic Partnership (RCEP) member countries have deferred concluding negotiations of the proposed free trade agreement to next year, as key member states head for elections and several market access issues remain unresolved.
In the August ministerial, trade ministers of member countries had resolved to conclude a “package of year-end deliverables" by December. However, with little progress on services negotiations and mounting pressure from the domestic industry, India was reluctant for early conclusion of negotiations given the upcoming general elections early next year. The decision to defer sealing the trade deal to next year will provide a much-needed breather to the Narendra Modi government.
“We welcomed the substantial progress made in RCEP negotiations in 2018. We have advanced to the final stage of negotiations. We are determined to conclude a modern, comprehensive, high quality, and mutually beneficial RCEP in 2019," said a joint statement on Wednesday.
So far, negotiations for seven chapters such as (i) economic and technical cooperation (ii) small and medium enterprises (iii) customs procedures and trade facilitation (iv) government procurement (v) institutional provisions (vi) standards, technical regulations and conformity assessment procedures (STRACAP); and (vii) sanitary and phytosanitary (SPS) have been completed.
“Ministers guided the negotiators to deliberate further on e-commerce, competition and investment chapters where consensus could not be reached during this meeting. Ministers urged the negotiators to intensify their work with a view of narrowing gaps and finding balanced outcomes in the negotiations with the aim of concluding negotiations by 2019," a statement by Indian commerce ministry said.
The RCEP joint statement said negotiations on goods and services market access and on investment reservation lists have advanced significantly with all RCEP participating countries (RPCs) intensively engaged in a series of bilateral and plurilateral negotiations throughout the year. “RPCs are within reach of concluding market access negotiations to meet the goals in the Guiding Principles and Objectives for Negotiating the RCEP, but some work is needed to close the remaining gaps. Special consideration may need to be given to the fact that not all RPCs have in place bilateral free trade agreements among themselves, without undermining the potential expansion and deepening of regional supply chains among the 16 RPCs," the statement said.
The key contention for India in RCEP has been the presence of China with which it has a massive $60 billion trade deficit and Indian industry apprehends greater market access to China could harm key manufacturing sectors like steel and textiles. India is also worried about giving greater market access to other non-FTA partners like Australia and New Zealand.
The Indian statement said the commerce minister defended India’s interests effectively and secured maximum flexibilities. “Both in STRACAP and SPS negotiations, India managed to obtain balanced outcomes in the application of the Dispute Settlement Mechanism. India showed flexibility on the principle of ‘consensus’ in the Institutional Provisions Chapter which helped in its successful conclusion during the meeting," it added.
RCEP is a proposed trade pact between 10 Asean countries and their six FTA partners—Australia, China, India, Japan, Korea and New Zealand. It comprises 25% of global GDP, 30% of global trade, 26% of foreign direct investment flows and 45% of the population.