NEW DELHI :
The Regional Comprehensive Economic Partnership (RCEP) grouping has the put the onus on India to convince 15 other member countries bilaterally on its demands within 10 days, failing which pending issues will be put before the heads of states who will meet on 4 November in Bangkok to announce conclusion of negotiations.
RCEP is a proposed free trade agreement (FTA) between the 10 member states of the Association of Southeast Asian Nations (Asean) and its six FTA partners.
In the two-day Bangkok ministerial on 11-12 October, trade ministers of 15 other countries failed to issue a joint statement as issues raised by India did not find enough support among other members.
Trade minister Piyush Goyal has asked that the base year for tariff cuts be shifted to 2019 instead of the 2014 agreed earlier as negotiations have stretched well beyond the initial 2015 deadline. If agreed to, this will give India five more years to cut tariffs. In the last two years, India’s average tariff rate has increased from 13% to 17% because of a hike in tariffs in sectors such as textiles, auto components, and electronic items.
Under the e-commerce chapter, India has asked for allowing data localization and for keeping the moratorium on imposition of import duties on electronically transmitted goods and services temporary as in the case of the World Trade Organization. However, other countries such as Japan want the moratorium to be permanent, which India fears could lead to a loss of revenue.
The RCEP grouping has said that India’s demand for an auto-trigger to safeguard against a sudden surge in imports should also be settled bilaterally with China, Australia, and New Zealand, but said that it will be subject to the approval of other member countries.
India has requested for a carve-out for certain tariff lines and sectors on which the so-called ratchet principle will not apply. Under the ratchet mechanism, any liberalization measure adopted by a member country cannot be replaced by new measures that are more restrictive. This constrains the policy space for the domestic country.
Though RCEP member countries have agreed to postpone for three years any implementation of investor state dispute settlement (ISDS), under which a private investor can sue national governments for any policy changes, RCEP members have proposed that after this period, ISDS will come into play on agreement of a majority of members instead of a consensus. India is opposed to this idea.
There is too much domestic pressure on the government to exit RCEP, said a trade expert on condition of anonymity. “The government may be using the fresh demands, which are difficult for other member countries to accept, as a part of the strategy for it to have an honourable exit. It can later claim that while it was willing to be part of the deal, other countries could not accommodate its demands," said the expert.
The Swadeshi Jagran Manch (SJM), an affiliate of the Rashtriya Swayamsevak Sangh, is holding a 10-day nationwide protest from 10-20 October against the proposed RCEP deal.
“The nation is facing a crisis in both the manufacturing and agriculture sectors, which is resulting in a job losses in the country. The crisis in the manufacturing sector is because of the lack of a comprehensive industrial policy since 1991," Ashwini Mahajan, co-convener of SJM, had said last week.
Goyal, however, had last week defended the proposed FTA, holding that India cannot remain isolated in a globalised world.
“If India remains out of RCEP, we will be left isolated from this large trading bloc. The trade among RCEP countries is about $2.8 trillion. If India sits outside RCEP, whether it is in our interest or against our interest, it is also the responsibility of the government to see. You will want us to engage to find solutions which is in the national interest," Goyal said on Thursday at an event in Nagpur.