{"id":35791,"date":"2018-11-01T11:47:52","date_gmt":"2018-11-01T06:17:52","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=35791"},"modified":"2018-11-01T11:47:52","modified_gmt":"2018-11-01T06:17:52","slug":"chinas-rcep-push-veils-grand-plan","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/chinas-rcep-push-veils-grand-plan\/","title":{"rendered":"China\u2019s RCEP push veils grand plan:\u00a0"},"content":{"rendered":"<p><a href=\"http:\/\/www.thehindu.com\/todays-paper\/tp-business\/chinas-rcep-push-veils-grand-plan\/article19441325.ece\"><span style=\"font-weight: 400;\">China\u2019s RCEP push veils grand plan<\/span><\/a><span style=\"font-weight: 400;\">:\u00a0<\/span><\/p>\n<p><b> Context:<\/b><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">Technical level talks of the proposed FTA, officially known as Regional Comprehensive Economic Partnerships (RCEP), held from July 18 to 28 at the Hyderabad International Convention Centre. <\/span><\/li>\n<\/ul>\n<p><b>Introduction:<\/b><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">16 Asia-Pacific countries participated in 19<\/span><span style=\"font-weight: 400;\">th<\/span><span style=\"font-weight: 400;\"> round of tariff negotiations held at \u00a0Hyderabad.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">The RCEP is billed as an FTA between the 10-member ASEAN bloc and its six FTA partners \u2014 India, China, Japan, South Korea, Australia and New Zealand.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">It would become the world\u2019s biggest free trade pact. This is because the 16 nations account for a total GDP (Purchasing Power Parity, or PPP basis) of about $50 trillion (or about 40% of the global GDP) and house close to 3.5 billion people (about half the world\u2019s population). India (GDP-PPP worth $9.5 trillion and population of 1.3 billion) and China (GDP-PPP of $23.2 trillion and population of 1.4 billion) together comprise the RCEP\u2019s biggest component in terms of market size.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">RCEP aims to boost goods trade by eliminating most tariff and non-tariff barriers \u2014 a move that is expected to provide the region\u2019s consumers greater choice of quality products at affordable rates.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">RCEP also seeks to liberalise investment norms and do away with services trade restrictions.<\/span><\/li>\n<\/ul>\n<p><b>Future of RCEP in present context of India China relation<\/b><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">A recent survey of Community social media platform \u2018Local Circles\u2019 on the Indian consumer\u2019s perception about items imported from China observed the opinion of Indian consumers about Chinese products:<\/span><\/li>\n<\/ul>\n<ol>\n<li><span style=\"font-weight: 400;\">52% of participants were of the opinion that for the same product, the quality of a \u2018Made in India\u2019 version was superior to the one from China.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">83% said they buy Chinese products as those items were the cheapest.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">On the issue of addressing \u2018quality concerns\u2019 about imported Chinese items, 98% said there should be better screening of such products before they enter the Indian market \u2014 including ensuring that only those imports meeting the Indian (BIS) standards are allowed.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">The poll assumes significance as it comes amid ongoing negotiations for a mega-regional Free Trade Agreement (FTA) &#8211; Regional Comprehensive Economic Partnership (RCEP).<\/span><\/li>\n<li><span style=\"font-weight: 400;\">The RCEP \u2018guiding principles and objectives\u2019 state that the \u201cnegotiations on trade in goods, trade in services, investment and other areas will be conducted in parallel to ensure a comprehensive and balanced outcome.\u201d<\/span><\/li>\n<li><span style=\"font-weight: 400;\">China is using its influence as the global leader in goods exports, has been deploying quiet diplomacy to ensure consistent focus on attempts to obtain commitments on elimination of tariffs on most traded goods.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">China is keen on an agreement on a \u2018high level\u2019 of tariff liberalisation \u2014 eliminating duties on as much as 92% of traded products.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">India\u2019s offer is to do away with duties on only 80% of the lines and that too, with a longer phase-out period for Chinese imports (ie, about 20 years, against 15 for other RCEP nations).<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Goods imports from China have been far outpacing India\u2019s shipments to that country because India\u2019s exports are mainly troubled by China\u2019s non-tariff barriers.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">This has led to goods trade deficit with China widening from just $1.1 billion in 2003-04 to a whopping $52.7 billion in 2015-16, though easing slightly to $51.1 billion in 2016-17.<\/span><\/li>\n<\/ol>\n<p><b>Importance of RCEP for China:<\/b><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">The RCEP is just one element of China\u2019s grander plans for global dominance. China wants to speed up the RCEP negotiation process and strive for an early agreement, so as to contribute to realising the greater common goal of building the Free Trade Area of the Asia-Pacific (FTAAP).<\/span><\/li>\n<li><span style=\"font-weight: 400;\">The FTAAP spans 21 Asia-Pacific Economic Cooperation countries, including the U.S. and China, but does not cover India (though it has sought to be an APEC member).<\/span><\/li>\n<li><span style=\"font-weight: 400;\">With the U.S. withdrawing from the Trans Pacific Partnership \u2014 a mega-regional FTA not involving India and China \u2014 that similarly aimed to help establish the FTAAP, the path is clear for China to push ahead with this strategic initiative to its advantage through the RCEP.<\/span><\/li>\n<\/ul>\n<p><b>Duty impact on India due to RCEP<\/b><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">A highly ambitious level of tariff elimination without enough flexibility would affect India the most on the goods side.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">In the RCEP group (except Myanmar, Cambodia and Lao PDR), India has the highest average \u2018Most Favoured Nation (MFN) tariff\u2019 level at 13.5%.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">India is the only participant that has a high level of merchandise trade deficit.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">India\u2019s trade deficit with RCEP countries is also more than half its global trade deficit.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">India\u2019s trade deficit with China \u201cis over three times its exports to China (in 2014), a situation not matched by any other RCEP member except Cambodia.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">considering India\u2019s vulnerabilities and large bilateral trade deficits, India will need substantial flexibilities to deal with China. A longer phase out period with back loading of concessions, particularly on sensitive products, will be essential.<\/span><\/li>\n<\/ul>\n<p><b>India\u2019s Concern at RCEP Negotiation held at Hyderabad:<\/b><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">The representatives from the Indian industry laid out their apprehensions before the industry bodies of other RCEP nations and the trade negotiators. that the proposed FTA could lead to a surge in inflow of low-priced goods, mainly from China.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">India Inc. feared that RCEP would result in their share in the domestic market contracting, and consequent downsizing\/closure of operations, as well as job losses. This could lead to lower incomes and reduced consumer spending.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Since India already has separate FTAs with the 10-member ASEAN bloc, Japan and Korea, India Inc. feels that on account of the RCEP, India may not gain much on the goods side with existing FTA partners.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">India is also negotiating separate FTAs with Australia and New Zealand. However, be it through a separate FTA or via RCEP, India\u2019s gains on the goods segment from Australia and New Zealand will be limited as MFN tariff levels of those two countries are already low.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">China is the only RCEP country with which India neither has an FTA, nor is in talks for one. Therefore, Indian industry sees RCEP as an indirect FTA with China.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">The India\u2019s FTA strategy should be guided by the \u2018Make In India\u2019 initiative that aims to boost domestic manufacturing and job creation within India.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Also, In return for greater market access in goods, India, with its large pool of skilled workers and professionals, might be trying to use the RCEP to gain on the services side, by securing commitments from the other nations to mutually ease norms on movement of such people across borders for short-term work.<\/span><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>China\u2019s RCEP push veils grand plan:\u00a0 Context: Technical level talks of the proposed FTA, officially known as Regional Comprehensive Economic Partnerships (RCEP), held from July 18 to 28 at the Hyderabad International Convention Centre. Introduction: 16 Asia-Pacific countries participated in 19th round of tariff negotiations held at \u00a0Hyderabad. The RCEP is billed as an FTA&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/chinas-rcep-push-veils-grand-plan\/\">Continue reading <span class=\"screen-reader-text\">China\u2019s RCEP push veils grand plan:\u00a0<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[555],"tags":[],"class_list":["post-35791","post","type-post","status-publish","format-standard","hentry","category-test-1","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704778064},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/35791","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=35791"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/35791\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=35791"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=35791"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=35791"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}