At RCEP meet in Manila, India resists pressure to cut tariffs further, open markets

Commerce and Industry Minister Suresh Prabhu resisted pressure for committing to greater market access at the Regional Comprehensive Economic Partnership (RCEP) Ministerial meet in Manila last week-end although the reprieve is likely to be short lived.

Trade Ministers from the 16 countries’ group — the 10-member ASEAN, China, India, Japan, South Korea, Australia, New Zealand — have agreed to meet again in November to try for a breakthrough.

“India managed to convey that it was not ready to commit to tariff elimination on the whole gamut of items that other members are pushing for as it needed to cover the sensitivities of its industry and agriculture. The pressure on the Indian Minister this time surprisingly was lower than usual and it was dealt with well. But Trade Ministers are determined to get the negotiations moving at the next meet in November in Manila,” a government official told BusinessLine .

New Delhi is expected to improve its current offer of tariff elimination of about 70-75 per cent items, with certain deviations (of lower cuts) for countries like China, Australia and New Zealand with which it does not have Free Trade Agreements, at the next negotiating meeting in South Korea in October.

Although the RCEP has now officially recognised that existing differences between members are too high to conclude the pact this year, there is a broad understanding to iron out all differences this year.

“At the Korea meeting we will definitely be expected to improve our current offer. We have to take a definite stand on how much we are prepared to give,” the official said.

There are clear indications that RCEP members are not willing to budge from the position that tariffs need to be eliminated on at least 90-92 per cent of items.

Ramon Lopez, Trade Secretary of The Philippines, which is currently chair of the ASEAN group, is reported to have said at a press conference on Monday that the only acceptable re-calibration is a number that is closer to the 90-92 per cent and anything lower or higher than that is not acceptable for ASEAN.

Lopez is also reported to have told some media representatives on the sidelines of the press conference that that there is already an agreement on tariff liberalisation for most of the participating countries, including some FTA partners, which would help add pressure other parties to concede.

This suggests that India would either have to agree to improve its offers or be sidelined at the negotiations. Although New Delhi demanded simultaneous improvement in offers in the services sector, there was no satisfactory response from other members, the official said.

“In the services sector, the ASEAN members are not willing to give any concession. They are not even willing to discuss the matter seriously as they say that they do not have the political mandate in their countries to do so,” the official added.

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