Aware of its massive trade deficit, India is preparing a final list of products on which it may retain import tariffs for China in the proposed Regional Comprehensive Economic Partnership (RCEP) agreement, said official sources.
The government has been preparing such a list for a while now, based on its plan of a “differential tariff reduction”. China, which has benefitted the least, has opposed this move, along with richer economies such as Australia and New Zealand.
“Considering our sensitivity to imports from China, this has been the case throughout,” said a senior government official, who did not want to be named, adding: “An extensive list is being prepared.”
He also said the list was unfinished and was being prepared after extensive consultation with domestic industry.
The RCEP, India most-ambitious trade pact, is currently under negotiation. It includes the 10-nation bloc of Association of Southeast Asian Nations (Asean) and their six free-trade partners — China, India, Japan, South Korea, Australia and New Zealand. Twenty-eight rounds of talks have concluded, apart from eight minister-level meetings.
Senior diplomatic sources from other nations confirmed that commitments to reduce tariffs are now dependent on individual nations. This may result in each nation setting a specific tariff reduction for each of the rest.
Sources also said India has suggested a mechanism to fix an import ceiling, again particularly for China. This is the first time New Delhi will fix such a ceiling in any trade deal.
Government officials did not confirm this, but they said similar proposals had been opposed by other nations before.
Earlier, India had agreed to reduce tariffs on 76 per cent of all items for all nations, apart from special measures for China. Others had demanded New Delhi open up at least 90 per cent of all items.
Currently, it is broadly accepted the RCEP will lead to tariffs being eliminated on 28 per cent of the traded goods to begin with. This will be followed by a total 35 per cent of all products being eliminated in phases.
Officials also said the final deal will necessarily include all negotiating countries.
India had been on the receiving end of repeated questions by other nations on whether it is serious about signing the deal. Senior leaders from Asean, including Malaysian Prime Minister Mahathir Bin Mohamad, had said the mega Asia-Pacific deal can be negotiated without India “for the time being”.
No early harvest
The government has also dismissed the idea of an “early harvest” approach to the RCEP talks. If this approach was adopted, it would mean the agreement would be signed after some issues had been agreed upon, while others would be resolved eventually.
The current stance is a shift from India’s earlier position of adopting a “package of early deliverables” created by the trade-negotiating committee of the RCEP.
Australia’s lead trade negotiator James Baxter has said the last ministerial meet in Bangkok saw all negotiating trade ministers unanimously decided to complete the negotiations in full by November, seven years after the talks started.
“As long as India’s domestic industry and our national interests is protected, the faster it (RCEP) is done, the better it is for India,” Commerce and Industry Minister Piyush Goyal, has said.
The government had a day-long talk with RCEP members such as Australia, Singapore and others as part of a “Track 1.5” round table on “Global and Regional Trade and Economic Integration Issues” on Friday.
Representatives of all member states are set to discuss pending issues over the weekend to chart out a possible course for the trade deal, government officials said. However, since the talks do not constitute an official negotiation round, no joint statement may be issued afterwards.
Source: Business Standard