India on September 9 said it has reservations on joining the proposed mega free trade agreement RCEP as it is concerned over the "protectionist policies" of China that have created a significant trade deficit between the two nations, as high as $57 billion in 2018. The Regional Comprehensive Economic Partnership (RCEP) is a proposed mega free trade agreement being negotiated among 16 countries including 10-nation ASEAN bloc (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam) and its six trading partners -- India, China, Japan, South Korea, Australia and New Zealand.
External Affairs Minister S Jaishankar, speaking during a panel discussion at the inaugural session of India-Singapore Business & Innovation Summit here, said India remained concerned over the "unfair" market access to Indian products and the "protectionist policies" of Beijing that have created a significant trade deficit between the two nations.
The trade deficit with India in 2018, according to official Chinese data, climbed to $57.86 billion from $51.72 billion in 2017 in about $95.54 total bilateral trade.
"The big concerns of India are of course, one, its relationship with China because we have an enormous trade deficit with China,” Jaishankar said in response to a question on the ongoing negotiations for the RCEP.
The Indian industry has already raised concerns over the presence of China in the grouping. Representatives of various sectors, including dairy, metals, electronics, chemicals, and textiles, have urged the government not to agree on duty cut in these segments while negotiating the RCEP.
India has time and again sought greater market access for its goods and services like pharma, IT and agri produce in the Chinese market with a view to bridging the widening trade gap, but has not achieved the much-desired result.
Due to the dumping of several goods by Chinese firms in India, New Delhi has imposed anti-dumping duties on those items from sectors like chemicals and iron and steel.
At the session, also attended by his Singaporean counterpart Vivian Balakrishnan, Jaishankar said India fears that the RECP deal, which would call for a lowering of tariffs or import duties, would lead to a flood of goods from China while not assuring India of an equal access to the Chinese markets, thereby widening its large trade deficit.
India has registered trade deficit in 2018-19 with as many as 11 RCEP countries, including China, South Korea and Australia.
Jaishankar also raised concerns that India's forte, its trade in services, was less well enforced through regulations than the trade in goods.
The deal had the geo-strategic objective of holding the line against protectionist and unilateral policies, he agreed.
Even so, it had to make economic sense, he said.
"RCEP, at the end of the day, is an economic negotiation. It has a strategic implication but the merits...have to be economic," he added.
A joint statement, issued after the meeting of trade ministers of RCEP countries in Bangkok on Sunday, said members have agreed to work together to iron out outstanding issues which are fundamental to conclude the talks this year.
On the other hand, Balakrishnan called the deal a "game-changer" that had the potential to secure the prosperity of its members in the face of a push-back against trade and globalisation.
"For India, China and Southeast Asia, the key political question is, can we arrive at a formula that would expand a rising middle class and give their children a sense of optimism," he was quoted as saying by The Straits Times newspaper.
Balakrishnan said Singapore, the largest foreign investor in both India and China, hoped the two Asian countries would eventually tide over their differences.
"In the next decade or two, China and India are going to be in significant trading relationship. This is something they will have to sort out. In due course, bilateral arrangements will be made," he said.
"But even as this rapprochement occurs, what we are trying to offer with RCEP is a multilateral model, a pan-regional model, the centre of gravity in the Indo-Pacific. And if we can sort out the fair rules which will promote trade and economic integration between India, China and South-east Asia, there is an enormous opportunity.
"I say all this without trying to trivialise or gloss over the difficulties in negotiations," he said.
"It is worth making an effort because this will be a gamechanger... the mother of all trade agreements," he said.
The Indian-origin Singaporean foreign minister also expressed confidence in the Indian economy and noted that the government of Prime Minister Narendra Modi has set the goal of doubling India's GDP to $5 trillion by 2024.
"I remain optimistic that because of the nature of the Indian economy and the transformation which Mr Modi is implementing, India can deal with this from a position of confidence," he said.
"Let's make the effort," Balakrishnan said.
Source: moneycontrol.com