Negotiations for realisation of the Regional Comprehensive Economic Partnership (RCEP) is expected to be completed before the upcoming East Asia Summit, ASEAN Summit, and other related meetings from November 2-4. This would pave the way for formal inking of the deal in June 2020. Prime Minister Narendra Modi will be participating in the East Asia Summit and other meetings in Bangkok early next month. The RCEP too will be high on the meeting agenda.
The RCEP negotiations-involving the ten-member countries of the Association of Sout-east Asian Nations (ASEAN) and its 6 dialogue partners: India, Japan, South Korea, New Zealand, Australia, and China, begun in November 2012. Several rounds of ASEAN-steered multilateral negotiations involving major Asian economies have taken place over the past seven years.
The latest meeting of this mega-regional trade bloc concluded this week in Bangkok. More than 80 percent of the negotiation agreements have been completed. Reportedly, negotiating countries have agreed on 185 out of 225 agreements in which each agreement specifically caters to one of the three key issues- goods, services, and investments.
RCEP has emerged as the cornerstone of regional economic dialogue involving ASEAN members and their partner countries including India. Participating in the RCEP negotiations has also been seen as a key element of India’s ‘Act East’ policy. Once realised, the RCEP would enable participating countries to go in for smoother and unhindered trade by way of bringing greater predictability and stability in their intra-regional trade ties.
However, the road to a satisfactory conclusion of the RCEP negotiations is laden with delicate issues. Market access and protected goods are major issues of disagreement among the negotiating countries. Of particular concern are the eight issues on which ministerial level dialogues were needed before the RCEP negotiations could be finalised. Dispute settlement procedures, e-commerce, and rules of origin have emerged as critical concerns for India.
At the ministerial-level meeting in Bangkok, Commerce Minister Piyush Goyal represented India. However, the meeting could not meet its objectives as most of the outstanding issues remained unresolved. There was no consensus on the text of a joint declaration with regard to RCEP negotiation meeting.
India has been engaging other negotiating parties for a mutually agreeable solution, which demonstrate that New Delhi is committed to its firm belief in a fair and just rule-based regional trade arrangement. However, India’s concerns are directly linked with the likely unhindered access that countries such as China would get in the Indian market. China is keen for a speedy finalisation of the RCEP negotiations as it would provide Beijing a leeway in the ongoing trade war with the US by way of gaining greater access to markets such as India.
While import restrictions applied in some sectors have so far protected the vulnerable sectors vis-à-vis China, the same may not be a reality post-RCEP. Moreover, India is faced with more than US $ 50 billion trade deficit with China. Beijing has proposed the setting up of a high level committee to address India’s concerns. Sub-sectors of the Indian economy directly linked to the rural population-such as dairy, would be vulnerable before highly competitive dairy industries of Australia and New Zealand. In order to effectively deal with such possible challenges, India is actively negotiating on issues such as data localization, rules of origin, and putting a cap on imports to avoid dumping by any particular country.
India is willing to join the RCEP provided New Delhi’s proposed safeguard mechanisms are included in the agreements. Such safeguards are meant to ensure that weaker sections of Indian society and vulnerable sectors of the economy, especially marginal farmers and Medium and Small-Scale Enterprises (MSME) are not hurt. Reiterating the government’s approach, Commerce Minister Goyal has stated that “every interest of the domestic industry and Indian people has to be protected before we execute any free-trade agreement. India will ensure that on services, on investments, in every aspect our national interests are protected”.
India remains consistent in seeking a fine balance between protecting the interests of her people with regional and multilateral trade and economic cooperation arrangements
Script: Dr. Rahul Mishra, Strategic Analyst on East & South-East Asia