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India is under diplomatic pressure from countries such as Singapore and Indonesia to agree to a speedy conclusion of the ambitious Regional Comprehensive Economic Partnership (RCEP) negotiations, the 23rd round of which is currently on at Bangkok.
“The Prime Minister of Singapore and the Indonesian President, in their recent meetings with Indian Prime Minister Narendra Modi, are learnt to have pushed for the RCEP in a big way urging India not to hold up the agreement. Commerce Ministry officials participating in the negotiations are now facing the Herculean task of meeting expectations of other RCEP members on market access for goods while protecting interests of the Indian industry,” a government official told BusinessLine .
The RCEP, which includes the 10-member ASEAN, India, China, Japan, South Korea, Australia and New Zealand, is likely to be the largest free trade bloc covering about 3.5 billion of the world population and 30 per cent of the gross domestic product.
Interestingly, while India had initially placed the condition that the offers in services under the RCEP have to match the offers in goods, the argument seems to be losing steam.
Goods offer
“The ASEAN is just not interested in giving substantial offers in the services sectors. India is being urged to improve its offers in goods despite the fact that there is not much improvement in services offers,” the official said.
Singaporean Prime Minister Lee Hsien Loong and Indonesian President Joko Widodo’s stress on early conclusion of the RCEP talks in their meetings with Indian Prime Minister Narendra Modi during his visit to their country, has increased pressure on Indian negotiators.
India, however, is finding it difficult to adequately respond to the steep demand for tariff elimination on 92 per cent of items made by the ASEAN. It is finding it especially hard to negotiate with China as the Indian industry is already reeling under pressure from cheap Chinese imports and trade deficit with the country has touched $63 billion.
It is also difficult for India to make substantial offers to Australia and New Zealand as it does not have any free trade pact with these countries.
“What is making matters worse for India is the fact that the ASEAN does not seem interested in budging from its demand of tariff elimination for 92 per cent of items. India’s reluctance to agree to such a large number is being interpreted as obstructionism,” the official said.
Select deviations
Although certain deviations in tariff cut commitments would be allowed to India for dealing with partners including China, Australia and New Zealand, it cannot be much lower from what is extended to the others, the official added.
Based on the progress in negotiations in the on-going round which will end on July 27, Trade Ministers from all 16 member countries will try to move negotiations on various chapters towards a conclusion when they meet in Singapore in end-August.
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