India will not join RCEP until concerns are addressed
NEW DELHI: The government is acting harshly by signing the Regional Integral Economic Association (RCEP) agreement to be part of the mega commercial block and has pointed out that his concerns range from the base year to tariff reduction to protection against Chinese imports and the opening of the service sector by the other 15 countries, have not yet been addressed.
With the talks coming into the final round before a joint statement on Monday night, negotiators are struggling to reach an agreement amid statements by Thailand and the Philippines that it can be delayed until February.
Indian officials have made it clear that the Modi administration is not willing to accept any deadlines and wants the country's interests to be fully protected before signing the pact.
The leaders of 16 countries are in Thailand for what was expected to be the final meeting.
A preliminary agreement of RCEP is expected today, setting the stage for countries to finalize the legal text that would cover a third of the global economy, making RCEP the largest commercial block.
While some countries indicated that India had raised problems at the last minute, sources told TOI that the government had been demanding for several months that their concerns be taken into account and a solution found.
During the last ministerial meeting, Minister of Commerce and Industry Piyush Goyal He had pointed out several problems, which led trade ministers to provide a special 10-day window for negotiations. The problems have not yet been resolved, an Indian official said Sunday night.
Indian negotiators question the design of the trade agreement, which will see the elimination of import tariffs of 80-90% of the goods, along with easier services and investment rules. For India, the great concern is the trade in goods, as the national industry fears that a lower customs tariff will see an avalanche of imports, especially from China, with which India has trade deficit .
India has raised a red flag over the move to use 2014 as the base year for tariff reduction . While RCEP negotiators are seeking to sign the deal in 2020, the new tariff regime will kick in from 2022 and will see duties go back to 2014 levels.
This will mean that for several products, such as mobile phones and electronic products, tariffs may need to be eliminated over time, which goes against recent government measures to increase import tariffs as part of a strategy to boost National manufacturing This is a fundamental design problem, a source said.
Similarly, the government has asked for more protection through what is called a rate differential. Unlike the past, the other 15 countries want a common list of products in which protection is provided by insisting on adding value. This is considered crucial to ensure that Chinese products are not repackaged and sent to India through, for example, Vietnam. Therefore, an addition of 30-35% value is sought in the case of a mobile phone, for example, instead of a situation in which only tempered glass is placed on a Chinese telephone in Vietnam and then exported to India with zero or lower tariffs.
The principle that is being used is very weak, which can lead to misuse, an official said.
In addition, India has been looking for a special safeguard mechanism for various goods imported from China, Australia and New Zealand to immediately impose higher duties in case of a sudden increase.