Steel, aluminium producers want no reduction commitments under RCEP

Amiti Sen New Delhi | Updated on May 22, 2019

Officials from 16 member-countries to meet in Bangkok on May 24

Steel and aluminium producers have asked the Commerce Ministry to exclude the two items from tariff reduction commitments in the on-going Regional Comprehensive Economic Partnership (RCEP) negotiations as senior officials from the 16 member- countries of the bloc prepare to meet in Bangkok this week to give a more concrete shape to the proposed pact.

“Senior officials from all 16 countries will get together at the inter-sessional meeting this week and there will be pressure to keep the sensitive list of items, on which no reduction commitments will be taken, very short. Both steel and aluminium producers have petitioned to the government to keep several of their items out of the reduction commitments,” a government official told BusinessLine.

Most RCEP countries, which include the 10-member ASEAN, China, Japan, South Korea, Australia, New Zealand and India, are keen to conclude the pact by the year-end and take on commitments to eliminate tariffs on more than 90 per cent of traded goods.

Steel producers and the Steel Ministry are of the opinion that if India reduces import duties on stainless steel products to zero per cent, it will lead to Chinese goods flooding the Indian market and could lead to the immediate closure of small-scale units. As per industry estimates, investments worth over ₹30,000 crore made by domestic industry in capacity building would be under threat if the sector is not protected.

Aluminium producers, too, have demanded that their interests be kept in mind while agreeing to the RCEP. Since last year, aluminium producers have been flagging the disastrous fallout of a possible elimination of tariffs for the item under the RCEP pact being negotiated. Last week, a number of producers met Commerce Ministry officials to suggest that not only should aluminium be placed on the negative list of items for which reduction commitments are not taken, but the rules of origin should also be stringent, a representative of the Aluminium Association of India told BusinessLine.

RCEP members together account for 35 per cent of total aluminium imports into India, which increased by 17 per cent from 591 kilo tonne (kt) in 2016-17 to 690 kt in 2017-18, according to industry figures.

The association added that if the ROO criteria is not strict enough China may dump its exports into India. It pointed out that the Chinese aluminium industry is heavily supported by government subsidies and incentives bringing down production costs and rendering competitiveness to their domestic industry.

“The items that will be included in the sensitive list will depend largely on the number of items that can be placed in it. India is trying hard to negotiate a long list so that apart from farm products, a number of industrial products can also be shielded from reduction commitments. But it will all boil down to what is acceptable to the other members,” the official said.

If the RCEP is finalised, it will result in the largest free trade bloc in the world accounting for 25 per cent of global GDP and 30 per cent of world trade.

Published on May 22, 2019

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