Amidst conflicting signals from the government over whether India will join the Regional Comprehensive Economic Partnership (RCEP) this year, Australia’s lead negotiator for the 16-nation free trade agreement (FTA) says all countries have “committed” to completing talks in time for the RCEP summit on November 1.
“What I can tell you is that in Bangkok last weekend, all ministers including India reiterated their commitment to concluding the negotiations in full by the time of the leaders summit in November,” negotiator James Baxter said, referring to an RCEP trade ministers’ meeting held in Thailand on September 8, attended by Union Commerce Minister Piyush Goyal.
On Friday, negotiating teams and diplomats from all 16 RCEP countries which include the 10 ASEAN states, and six ASEAN-FTA partners China, India, Australia, New Zealand, Japan and South Korea, will meet for a “Track 1.5” round table on “Global and Regional Trade and Economic Integration Issues”. The meeting will be inaugurated by Minister of State for Commerce & Industry, Hardeep Singh Puri, who is expected to articulate India’s continuing concerns about signing on to the agreement.
India is seeking a mechanism to ‘cap’ imports as a safeguard measure in case its withdrawal of tariffs under RCEP leads to a sudden surge in goods flooding the Indian market. Other sticking points have been over a dual tariff mechanism for countries India doesn’t have an FTA with like China, and the rest, as well as the need for freedom of movement for services from India to the other countries. With Australia and New Zealand in particular, India has been negotiating on agricultural and dairy imports.
RCEP negotiations are now in the home-stretch with only “a small number of critical issues outstanding” between the 16 countries, say officials involved in the discussions. Of 29 parts of the agreement including the preamble, chapters on rule and market access and annexes, only about 12 parts remain incomplete. Seven chapters have been fully concluded, and two others are nearly concluded.
When asked if India, as the only outlier from RCEP, will be left out of the agreement or asked to join it later, Mr. Baxter said categorically that there has been “no discussion” on either concluding the deal with one or more member being left out, nor are there any RCEP talks on for an “early harvest” or partial agreement, indicating that the group expects to see full support for the final agreement when leaders of all RCEP nations attend the summit in seven weeks in Thailand. Before that, Mr. Goyal and other trade ministers are expected to meet atleast once more to finalise details of the agreement.
Mr. Baxter’s comments came as the two key ministers dealing with the negotiations sent out mixed messages over joining RCEP. Speaking in Singapore, External Affairs Minister S. Jaishankar said that India still has “reservations” about joining RCEP. “The big concerns of India are, of course, one, its relationship with China because we have an enormous trade deficit with China,” Mr. Jaishankar said when asked about India’s stand.
Speaking to journalists in Delhi a day later, however, Mr. Goyal sounded more positive about the agreement and said that the “National interest can’t be hijacked by one or two industries... Maximum interests should be protected.” Mr. Goyal also pointed out that while several trade groups were worried about RCEP, the industry was “split down the middle”, with cotton and textile companies welcoming the new market access that RCEP will bring.
If completed, RCEP will be the world’s biggest FTA, comprising countries that make up 45% of the world’s population with 33% of its GDP, and at least 28% of all trade in the world today, which are projected to form half the world’s GDP by 2050. While several labour groups and industry bodies have lobbied against the agreement and argued for more protection, several economists have pointed out that not joining the RCEP will cut India out of the world’s biggest trade bloc. A final decision is expected closer to the summit, just ahead of Prime Minister Narendra Modi’s visit to Thailand on November 1.