RCEP: India in talks with China for a balanced pact

With the Regional Comprehensive Economic Partnership (RCEP) deal deferred to next year, India can breathe easy for now but with the next meetings scheduled for February and April, New Delhi will have to come to quick bilateral understandings on dismantling tariffs with challenging partners like China.

“The pressure is still on India to improve its goods offers to RCEP members, including China. The going will be tough for us in 2019 as members don’t seem ready for a low ambitions pact,” an official told BusinessLine .

Indian negotiators are positive about the extra year that they have got to seal the deal as they hope to get a better deal on services and cover all sensitive areas in goods in the best manner possible, another official said.

The next RCEP round is in Indonesia in February and the meeting of Trade Ministers in Bangkok in April.

While with members such as the ASEAN, Japan and Korea, with which India already has free trade agreements (FTA), it will have to dismantle tariffs on over 90 per cent of the items, for China, New Zealand and Australia (non-FTA countries), tariffs have to be eliminated on about 80 per cent items.

“India’s main concern is about dealing with China as the Indian industry is already struggling to cope with an influx of goods from the country and the bilateral trade deficit is widening every year,” the first official said. China’s trade surplus with India was over $60 billion last year.

To get around the problem, New Delhi is trying to negotiate a long phasing out period spanning 20 years with China so that the Indian industry gets time to adjust to competition. “For very sensitive items, India is trying for a 25-year phase-out period,” the second official said.

However, the number of products on which tariffs have to be eliminated at once and the sequencing of the tariff elimination of other items have to be negotiated. “India already has had several rounds of negotiations with China on the issue. There is another meeting that is scheduled later this month,” the official said.

It will also be difficult to decide on the list of sensitive items with Australia and New Zealand as in the absence of a bilateral FTA, most items at present have tariff protection.

“The trouble is that although we have bought more time, the tricky issues in goods remain. We also need to get better offers from members in the area of services. There is no time to sit on our laurels and we have to keep negotiating wisely,” the official said.

The Commerce Ministry has initiated an internal detailed study on the existing tariff structure with RCEP members, including China, and what tariff eliminations would actually mean in terms of giving additional market access to the partner countries.

“We will have that study with us very soon and it will give a clearer picture on the negotiations to all stakeholders,” the second official said.

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