RCEP talks: India stands firm on market access in govt contracts, rejects binding commitments

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With ASEAN’s support, restricts negotiations to transparency, exchange of information

New Delhi, August 2

Backed by the 10-member ASEAN group, India managed to restrict the scope of talks on government procurement to exchange of information and transparency amongst members and exclude commitments on market access at the recent round of Regional Comprehensive Economic Partnership (RCEP) negotiations in Hyderabad.

In the area of goods, though, pressure remained high on India to go beyond its present offer of eliminating tariffs on 80 per cent items.

“With the ASEAN strongly backing India, the negotiating team managed to ensure that market access commitments are not part of the government procurement agreement being negotiated. At Hyderabad, the discussions were only on transparency and exchange of information which India is comfortable with,” a source privy to negotiations told BusinessLine.

The next Ministerial round of the 16-member RCEP — which includes the 10 ASEAN countries, India, China, Japan, Korea, Australia and New Zealand — scheduled next month in the Philippines will give a more concrete shape to the official level discussions that took place in Hyderabad.

While New Zealand, South Korea and Japan were trying to push for negotiations on market access commitments in government procurement, China did not take any stand, the official added.

Local preference

Although India allows foreign players to participate in government procurement bids, roughly valued at $300 billion annually, it is free to make its own rules and give preferences to local players. It will lose the freedom once it gives binding commitments in market access to other countries, which New Delhi is not ready for.

“India gives preferences in government procurement to a number of categories within the country such as the small-scale sector and women entrepreneurs. If it gives market access commitments to other RCEP members, it may stand to lose the freedom to give preferences to domestic interest groups,” the official said. India has not given market access commitments in government procurement to any of its free trade agreement partners including ASEAN, Japan and South Korea precisely because it wanted to protect its policy making space. Neither is the country a signatory of the government procurement agreement of the WTO.

“Although India did agree to include a chapter on government procurement in the RCEP due to pressure from some members, it does not mean that it has to agree to open up government procurement,” the official added.

But, agreeing on transparency and exchange of information could lead to problems in the future if countries insist on discussions on new rules in the area of government procurement with other members prior to its finalisation.

“The Indian negotiators are fully aware of the negative fall-outs of agreeing to discuss new rules before they are implemented. The country will see to it that such a provision does not get incorporated into the agreement,” he added.

The support of ASEAN in keeping out market access commitments from the government procurement pact is proving to be very useful to India. “In fact, at the negotiations in Hyderabad, it appeared that the ASEAN was more averse to any commitments on market access than India. It suited India fine,” he said.

On market access in goods, the official said that the RCEP members remained unhappy with India’s offer of eliminating duties on 80 per cent of traded goods and pressure was on for higher commitments. Most RCEP members want that tariffs should be reduced to zero on 92 per cent items.

The RCEP, once implemented, could be one of the largest free trade bloc in the world with a GDP of over $22 trillion (about 40 per cent of world trade) and a population of 3 billion (45 per cent of world population).

Published on August 02, 2017
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