JOIN USPM Modi to insist on India’s proposals at RCEP summit
India can sign the Regional Comprehensive Economic Partnership (RCEP) agreement if other nations participating in the negotiations for the pact take an accommodative approach to the “reasonable proposals” put forward by it, Prime Minister Narendra Modi is likely to underline later on Monday.
Modi will join the leaders of 15 other nations participating in the negotiations for the RCEP at a conclave, which will be hosted by Thailand Prime Minister Prayut Chan-o-Cha on the sideline of the East Asia Summit. They will review the progress of the negotiations for the RCEP, which, if signed, will create the largest free trade area of the world.
Hopes for the leaders announcing the conclusion of the negotiation of the 16-nation pact during the summit on Monday dimmed after New Delhi proposed certain measures to be incorporated in the agreement – primarily to make sure that cheap imports from China do not flood the markets in India after the RCEP comes into place.
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Though some of the RCEP negotiating nations are believed to be in the favour of going ahead and signing the agreement without India, the majority have been arguing against such a move. They are of the view that the free trade area, which the RCEP would create, must include India to counterbalance China.
Prime Minister would underline during the RCEP summit that proposals put forward by New Delhi was very “reasonable” and in the interests of the domestic industry in India. He would call upon the leaders of other RCEP nations to take a more accommodative approach to New Delhi’s proposals, sources told the DH in New Delhi just hours before the summit in Bangkok.
India has demanded an “auto-trigger mechanism” to protect its own industries from surge in cheap imports after signing of the RCEP pact, particularly from China. The “auto-trigger mechanism” will ensure that safeguard duties would be automatically imposed after imports from another country would reach a certain threshold.
New Delhi has been cautious during the RCEP negotiations in view of its huge trade deficit with China, which widened from $ 51.72 billion in 2017 to $ 57.86 billion in 2018. India has been worried about the possibility of its market being flooded by cheap imports from China when the RCEP agreement would come into effect.
India has reservation about the proposed Investor-State Dispute Settlement (ISDS) body being set up within the RCEP framework. New Delhi is not ready to allow its domestic legal process to be challenged outside India. The other nations, however, are keen to have an ISDS mechanism provided within the agreement itself, ostensibly in view of the history of Supreme Court of India canceling 2G licenses granted to international telecom companies.
New Delhi is also demanding more stringent ‘Rules of Origin’ as it is apprehensive that India’s market could be flooded with the cheap import from a non-RCEP country, which might route its goods through a RCEP-country that might have had a bilateral Free Trade Agreement with it.
India is also resisting pressure from China and a few other countries to accept 2014 as the “base year” for bringing down tariff after the RCEP comes into place.
If India accepts what China wants it to, it would have to bring down the duties on imports of items like mobile phones and electronic gadgets to the level of 2014 when the new tariff under the RCEP would come into place in 2022. New Delhi wants 2019 to be the “base year” for bringing down tariff under the pact.
Prime Minister is also likely to reiterate India’s position that the RCEP negotiation should lead to an “equitable and inclusive” trade agreement, striking a balance among trade in goods, trade in services and investments, sources said in New Delhi.
Though the third RCEP summit was expected to announce conclusion of the negotiation, it might now end with the leaders pledging to clinch the deal in 2020.
The RCEP is a proposed free trade agreement being negotiated by the 10 South East Asian nations – Brunei, Vietnam, Cambodia, Laos, Thailand, Indonesia, Malaysia, Myanmar, Philippines and Singapore – along with the six other nations – India, China, Japan, Australia, New Zealand and South Korea. The 10-nation-ASEAN (Association of South East Asian Nations) already has separate free trade agreements with each of the six other nations, which are participating in the negotiation for the RCEP.
If signed, the RCEP will create the largest free trade area in the world, covering 3.6 billion people or the half of the global population. The 16 participating nations account for 39.5% ($ 49.5 trillion) of the GDP of the world.
The negotiation for the RCEP was formally launched in November 2012. Though the negotiation was expected to be concluded by 2015, it missed several deadlines.