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RCEP talks trigger import surge worry.


Date: 11-10-2019
Subject: RCEP talks trigger import surge worry
NEW DELHI: Commerce and industry minister Piyush Goyal heads to Bangkok for the final leg of negotiations for the proposed Regional Comprehensive Economic Partnership (RCEP) Agreement, amid mounting worries of an import surge, especially from China, once the mega free trade pact, involving 16 countries, kicks in.

While the government has sought to assure stakeholders that it will have safeguards to quickly block imports, at best 60-70 products out of over 10,000 may be covered by the mechanism demanded by Goyal at the last meeting. With several ministries still not convinced about the plan, India is expected to demand that the list be widened, amid indications that the Narendra Modi government will go ahead with the deal, arguing that Indian companies will have a chance to be part of the global value chain. 

The ministerial meeting in Thailand is seen to be the last major round of discussion before leaders meet in early November to endorse the deal. 

The big fear is China, with ministries ranging from textiles and industry to steel, electronics and even defence, wanting that import restrictions should be maintained and duties should not be lowered. Experts believe Indian exporters may not gain much as agreements with other major countries such as Asean members, Japan and South Korea are already in place. RCEP will only end up opening the market to China, with which India has a massive trade deficit. Of the $105-billion trade deficit with RCEP countries, nearly half was with China.

In any case, India's demands on services have not found much traction and suggestions such as visa-free travel in the region for Indian businessmen have been trashed by negotiators from other countries, although the facility is available to the Chinese. 

Over the last week, there have been several rounds of discussions, involving Goyal, external affairs minister S Jaishankar, finance minister Nirmala Sitharaman, home minister Amit Shah and Modi. With nearly 90% of the negotiations on the goods side complete, there is little leeway for India to significantly change the terms of agreement especially when technical issues such as "rules of origin" have already been decided. Many fear that the new rules being used in RCEP will make it easier for Chinese goods to be routed into India via a third country. 

While India going to lower import duty on 80% of goods coming from China over a 20-year period, in case of Asean countries, the coverage will be around 90%. So if a Chinese company cannot export an item into India at a concessional duty, it may just route it through Vietnam.

In any case, the general consensus is that India is not getting anything much in return. While more services trade may be touted as the big takeaway, experience with Singapore and Asean shows that Indian professionals have not gained much. For instance, Singapore had virtually stopped issuing visas to Indian IT professionals, although it had committed to it under the FTA. In any case, negotiators from other countries had focused on extracting more on goods trade than offering any openings on services, prompting then commerce minister Nirmala Sitharaman to clearly state that both tracks have to move simultaneously.

New Zealand, for instance, is pitching hard for lowering duties on dairy products, a politically sensitive issue, but has offered a few hundred visas in return, sources said.

Source: timesofindia.indiatimes.com 

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