Zero duty to hit Indian dairy industry :

Zero duty to hit Indian dairy industry :

Context : 15 crore farmers will be impacted by FTA

Introduction :

• The Indian dairy sector, providing livelihood to 15 crore farmers, would be severely hit if import duties on milk products were eliminated under any Free Trade Agreement (FTA) including the Regional Comprehensive Economic Partnership(RCEP), according to the local dairy cooperative Amul.
• Farmer’s organsiations have threatened to hold nationwide protest if the dairy sector is opened up under the RCEP- the proposed mega-regional FTA involving 16 Asia Pacifica nations including India- or any other FTA including those proposed separately with Australia and New Zealand.

Key points :

• Presently, the duty on milk and milk products ranges from 40% to 60%, which gives the local industry enough protection to build its competitiveness.
• Against the 15 crore dairy farmers in India, there were only 12,000 of them in New Zealand and 6,300 in Australia.

RCEP in India :

• RCEP involves the Association of Southeast Asian Nations, South Korea, Japan, China, India, Australia and New Zealand, with the emphasis centered on facilitating open trade without tariffs, duties and quotas that can stimulate commerce and benefit all sides.
• The current round of negotiations is crucial as members are expected to finalise the broad contours of the agreement.
• It will include members making their second round of offers on tariff reduction on goods, nations deciding on investment rules, as well as India going against ASEAN and China on market access for the services trade. The RCEP, aims to liberalise investment norms as well as boost trade by eliminating/drastically reducing import duties on goods and bringing down ‘barriers’ in the service sector.
• The 16 nations account for a combined GDP of close to $ 50 tillion( about 40% of the world’s GDP) and are home to around 3.5 billion people

Background :

• The RCEP was built upon the existing ASEAN+1 FTAs with the spirit to strengthen economic linkages and to enhance trade and investment related activities as well as to contribute to minimising development gap among the parties.
• In August 2012, the 16 Economic Ministers endorsed the Guiding Principles and Objectives for Negotiating the Regional Comprehensive Economic Partnership.
• The RCEP negotiations were launched by Leaders from 10 ASEAN Member States (Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Viet Nam) and six ASEAN FTA partners (Australia, People’s Republic of China, India, Japan, Republic of Korea, and New Zealand) during the 21st ASEAN Summit and Related Summits in Phnom Penh, Cambodia in November 2012. The RCEP negotiations commenced in early 2013.
• The objective of launching RCEP negotiations is to achieve a modern, comprehensive, high-quality, and mutually beneficial economic partnership agreement among the ASEAN Member States and ASEAN’s FTA partners.
• The Association of Southeast Asian Nations (ASEAN) has free trade agreements with six partners namely People’s Republic of China (ACFTA), Republic of Korea (AKFTA), Japan (AJCEP), India (AIFTA) as well as Australia and New Zealand (AANZFTA).
• Its market estimated to cover three billion people, to account for 40% of world trade.