Economy

New Delhi must stay out of RCEP to protect its industry, agriculture: Forum for Trade Justice

Our Bureau New Delhi | Updated on October 16, 2019 Published on October 16, 2019

“Rather than moving forward, India is moving backward on its policy over investment agreements,” says Kavaljit Singh of Madhyam

The Regional Comprehensive Economic Partnership (RCEP) pact which India is negotiating with 15 others, including the 10-member ASEAN and China, will not only hit industrial sectors and agriculture the most because of tariff elimination but may also force the country to give up its policy space in determining e-commerce and investment rules, the Forum for Trade Justice has cautioned. The forum includes academicians, economists, farmer bodies and labour representatives.

“What is worrying is that the talks have gone so far in such detail without any meaningful involvement of the real stakeholders who will face the real consequences. There has been only some selective consultations with certain industrial sectors and government departments,” pointed out Shalini Bhutani, legal researcher and trade analyst.

The 16 RCEP countries, which also include Japan, South Korea, Australia and New Zealand, have a deadline of October 22 to finalise the talks so that an announcement of its conclusion can be made at the RCEP Leaders’ Summit in Bangkok on November 4. Once concluded, the RCEP could be the largest trade bloc in the world accounting for 39 per cent of global GDP and 30 per cent of global trade.

Auto-trigger mechanism

At the RCEP Ministerial meeting last week, Commerce & Industry Minister Piyush Goyal sought adequate safeguards in terms of stringent Rules of Origin (ROO) and a workable auto-trigger mechanism for imposing additional import duties to check import surges, especially from China. Both Indian industry and agriculture are terrified of increased competition from China which has a trade surplus of over $50 billion with India.

“The drastic reduction in import duty and flooding of cheap agricultural produce will negatively impact farmgate prices in India. Indian farmers will loose everything if India signs RCEP,” warned Yudhvir Singh, Coordinator, All India Coordination Committee of Farmers Movements.

Tariff differential

Ranja Sengupta of the Third World Network pointed out that “tariff differential with China that India is working out to give its industry and agriculture greater protection will be meaningless as China can use the ROO which allow any product with some value creation in the RCEP region to enter the Indian markets duty-free (through cumulation). “China has already been circumventing ROO and will now find an easier route even for products not opened up to China under RCEP,” she said. Sengupta added that despite India trying to ensure that China be excluded from cumulation in the ROO rules, other members were not agreeing.

Similarly, the auto-trigger mechanism, too, may not be able to protect Indian industry and agriculture from import surges, said Biswajit Dhar from the Jawaharlal Nehru University. Dhar said not only were RCEP members not agreeing to extending auto-trigger to a substantial number of items, there was also no clarity yet on the threshold limit for the trigger. “Determining threshold level for triggering higher import duties is very important as WTO negotiations on safeguarding agriculture products collapsed around it,” he said.

‘Moving backward’

The investment chapters in the RCEP are also highly ambitious and go much beyond India’s model Bilateral Investment Treaty (BIT) text and the WTO’s TRIMS Agreement, said Kavaljit Singh of Madhyam. “Rather than moving forward, India is moving backward on its policy over investment agreements,” he said.

Published on October 16, 2019
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