RCEP: India hardens stand ahead of ASEAN summit

RCEP: India hardens stand ahead of ASEAN summit

Context

In a sign that India’s Free Trade Agreement (FTA) negotiations could slow further, the Ministry of External Affairs (MEA) has taken a strong stand that the country should restrain itself from concluding any such pact from which it would not gain in the medium term

What has happened?

Ministry of External Affairs (MEA) has taken a strong stand that the country should restrain itself from concluding any such pact from which it would not gain in the medium term

RCEP

The RCEP is a proposed mega-regional FTA involving the 10 member countries of ASEAN and its six FTA partners including India, China, Japan, South Korea, Australia and New Zealand

Pressure on India

While there is immense pressure on India in the RCEP negotiations to commit to opening up (90%) of its traded goods, what is troubling the government is the fact that other RCEP countries have so far been lukewarm to India’s demands for greater market access in services, particularly on easing norms on the movement of professionals and skilled workers across borders for short-term work

India isolated

India, which is defensive regarding opening up its goods sector, is currently virtually isolated in the RCEP talks, the sources said

Next round of talks

The next round of talks is in February in Indonesia. So far, 20 rounds of negotiations have been held, in addition to five ministerial meetings, three inter-session ministerials and one summit level talks between heads of state

Widening trade deficit

• Significantly, while the India-ASEAN Trade in Goods Agreement was inked and enforced from January 1, 2010, India’s goods trade deficit with ASEAN widened from $4.98 billion in 2010-11 to $14.75 billion in 2015-16, and then narrowed to $9.56 billion in 2016-17
• The huge goods trade deficit has led to questions on whether the pact is only helping ASEAN nations and not benefiting India