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India offers to remove duty on 40% of product lines for 15 countries at RCEP.


Date: 08-12-2014
Subject: India offers to remove duty on 40% of product lines for 15 countries at RCEP
NEW DELHI: Unexpected support from South Korea and China has allowed India to offer to eliminate duty on just 40 per cent of product lines for 15 countries in the regional trade and economic partnership (RCEP). Japan, Australia and New Zealand however continued to push for a more ambitious initial offer from India at the sixth round of RCEP talks which concluded in New Delhi on Friday.

India is moving ahead cautiously in talks on the regional trade deal as it faces huge import risk from China, with which it already struggles to contain a large trade deficit of $36 billion, even without any free trade agreement. "One major achievement for India has been that it is no longer isolated on goods, but is jointly supported by China and (South) Korea who also want to open up just 40 per cent tariff lines in the initial offer," said a government official.

Others want India to start with freeing up close to 80 per cent of tariff lines, which is what India agreed to in its trade accord with Asean.

"We cannot give the same initial offer in RCEP what we gave to Asean, of 79 per cent tariff lines, since we do not have a deal with Australia and New Zealand yet and no negotiation with China, which is already a threat to our industry," said the official. "We are backed by two big guns now."

Talks on both goods and services remained inconclusive. They will now resume in February in the seventh round in Pattaya, Thailand.

India is unlikely to agree to duty concessions in select sectors including agriculture, textiles and steel, experts said. RCEP is a proposed comprehensive free trade pact among 10 Asean countries, Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam, and six partners with which they have free trade agreements (FTAs), including Australia, China, India, Japan, South Korea and New Zealand.

The pact seeks to include goods, services, investments, competition and intellectual property and is targeted to be concluded next year.

India has so far signed FTAs with Asean, South Korea, Japan, Singapore and Malaysia, and it is negotiating pacts with New Zealand and Australia.

India has avoided a pact with China for fear of its manufacturing industry getting hurt.

Along with Japan and South Korea, India made a joint proposal on what the modalities on goods should be.

"With China, tariff doesn't matter as even without a trade agreement, it is pushing so many products into India through so many channels. So even if we give 40 per cent tariff lines, we will lose, unless our industry becomes competitive, which will take time," said Arpita Mukherjee, professor, Icrier.

Differences persisted on the modalities related to services as well. India backed by six Asean countries sought a positive list approach to the offer, where the commitment to open certain services is listed. On the other hand, countries including Australia, Japan, South Korea and China want a hybrid approach, where countries open up the entire sector and protect just certain areas that are listed.

India is pushing for a simultaneous agreement on goods and services, whereas some countries have shown willingness to conclude a pact on goods first. There was intense pressure on the intellectual property rights front as well, with Japan pushing for stringent patent norms that go beyond the Trade-Related Aspects of Intellectual Property Rights (TRIPS) provisions of the World Trade Organization. But the government is clear that it won't concede anything beyond a point on this front.

"We are clear about our red lines and will not talk beyond TRIPS plus," the official added, referring to tighter rules on intellectual property than those in TRIPS.

Source : economictimes.indiatimes.com

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