Hyderabad blues

India has become rather secretive about its negotiating stance in the Regional Comprehensive Economic Partnership (RCEP) — a trade bloc of 16 countries (Asean plus Japan, China, South Korea, India, Australia and New Zealand) which accounts for over 40 per cent of the world’s population and output. If the outcome of the Hanoi meet held about two months back was unclear, the recently concluded Hyderabad meet has left stakeholders in the dark. Surely, this is no way to conduct discussions on tariff lines for farm and industry products, e-commerce, intellectual property, the opening up of services and government procurement, impacting the livelihoods of millions of people. Apart from an observation by the commerce secretary to a section of the media (the commerce minister was not present at the meeting) that ‘there was enough political will to expedite the conclusion of the talks’, perhaps indicating that India wouldn’t walk out, no specifics were forthcoming. This is disconcerting in view of reports in the wake of the Hanoi meeting, which were neither confirmed nor denied by the Government, that India had agreed to 80 per cent free tariff lines (with a deviation of 6 per cent either way) against the demand of 92 per cent. This set off alarm bells in sections of industry and farmers’ organisations, which turned out in large numbers at the ‘alternative’ groupings in Hyderabad. The earlier three-tier formula of offering 80 per cent free tariff lines to Asean (keeping the FTA status quo), 65 per cent to Japan and Korea and 42 per cent to China has evidently been dropped. There are no indications that India has secured any gains on services, supposedly its bargaining chip for allowing more market access. The Centre must explain the progress of its talks and the rationale of its positions. It should take stakeholders into confidence — ranging from business chambers, big and small, farmers’ organisations and dairy cooperatives — before it sets off for the next round of talks in September.

Fears pertain in particular to opening up industrial sectors to China — India’s largest trading partner with whom it already runs a trade deficit of over $50 billion, or about half of India’s total trade deficit — besides the dairy sector to Australia and New Zealand. That India’s FTA experience with Asean has not been a happy one has been acknowledged by the commerce ministry and the Economic Survey 2015-16 . India’s trade deficit with Asean has tripled to about $15 billion after the FTA was signed in 2010, whereas exports at about $25 billion are virtually stagnant, after rising to well above $30 billion in the intervening years. Imports of not just palm oil and coal, but chemicals, iron and steel, rubber, plastics and chemicals have impacted vast sectors of the economy.

This is not to argue against trade liberalisation per se, but to negotiate market access on our terms. While spurring competitive forces, India needs to put a better price on its large market and skilled workforce.