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India may not heed calls for tariff cuts at Regional Comprehensive Economic Partnership meeting |
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NEW DELHI: India will tread with extreme caution at the sixth round of the Regional Comprehensive Economic Partnership (RCEP) negotiations, beginning Monday in New Delhi. The government is under intense pressure from countries such as Australia and New Zealand to give heavy duty reductions to all member nations of the grouping, including China with which India ran up a $36 billion trade deficit last year.
The RCEP is a proposed comprehensive free trade agreement (FTA) between 10 countries in the Association of Southeast Asian Nations (Asean) and their six partners with whom they have FTAs - Australia, China, India, Japan, South Korea and New Zealand. The pact proposes to cover goods, services, investment, competition and intellectual property.
"Serious differences continue to exist over the modalities of goods, services and investment pacts. Countries like Australia and New Zealand are getting very ambitious, asking us to give deeper and wider cuts in tariffs, but we will be very conservative and begin with an offer lower than what we agreed to give Asean," said a commerce department official. Several countries are putting pressure on India to table the initial offer during the New Delhi round of negotiations, but India is unlikely to budge. "We will not table an initial offer (in this round)," the official said.
The grouping accounts for 40 per cent of the world trade. India has the highest average tariff in the region at around 14 per cent, putting it on a weaker negotiating position.
New Delhi has long avoided a preferential trade pact with China but has to face it in RCEP. "We can't afford to give large access to China," said another official. Experts cautioned that in the present domestic manufacturing scenario, India is not prepared to face China, and will need to carry out swift domestic reforms and put in place standards to check deluge of imports from the neighbouring nation. "Even without preferential tariffs, it (China) has got so much market access. Worse is that Worse is that we have not been able to put our act together," said Biswajit Dhar, professor at Jawaharlal Nehru University.
"Unfortunately, India has very few negotiating options." India will push a simultaneous agreement on goods and services, whereas other countries, including Japan and South Korea and the Asean bloc want to conclude a pact on goods, before that on services. "Asean is not interested in a services pact, which was also seen during the India-Asean FTA when services was concluded much later than goods. But pressing for parallelism between goods and services will delay negotiations, giving India breathing time to do reforms back home and be ready for a pact like RCEP," said Dhar.
Arpita Muherjee, professor at the Indian Council for Research on International Economic Relations, warned that India was not prepared for RCEP. "These countries have given almost 95-99 per cent tariff lines in various trade agreements, and would like India to reduce tariffs to that extent only in RCEP," she said.
Source : economictimes.indiatimes.com
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