PM Modi in Thailand: The proposed Regional Comprehensive Economic Partnership (RCEP) deal may not have a concrete outcome on November 4 (Monday). The 16 countries negotiating the mega trade deal are expected to come out with a joint statement without concluding the deal in Bangkok, Thailand, according to reports in Thai, Japanese and Singapore media.
The delay in finalising the proposed free trade agreement (FTA) is solely because of India's insistence on more tweaks in it to protect its domestic industry. This could bring some respite to the agitating sections of Indian industry, especially the trade and agriculture communities in India.
According to Japanese TV channel, Fuji News Network, the negotiations during a preparatory meeting between the trade ministers of RCEP member countries held on November 1 failed to reach an agreement. This was because India was not willing to lower or eliminate tariffs on several products owing to the threat of cheap imports from China.
The channel further said that a joint statement will be released at the Leaders' Summit on November 4 in the presence of Japanese prime minister Shinzo Abe.
The Strait Times of Singapore reported that 15 countries are ready to go ahead with what could be the world's largest FTA, but India remains the last holdout. RCEP, once established, will cater to half of world's population controlling a quarter of the world's GDP and trillions of dollars in trade. The newspaper quoted Ramon Lopez, the Philippine secretary of trade as saying that one country still needed "some consultations and confirmation from back home" before it could give its consent to all the 20 chapters accepted by the rest member nations.
The report further said that while Lopez refused to acknowledge that one country was "India", he did not deny it either. When asked if the country he referred to could be excluded from the discussions, he reportedly said, "Anything is possible but the mindset right now is for everyone to be in. The intention is to include all 16 so that we can have a more comprehensive, high quality FTA in the region."
Meanwhile, Thailand's Bangkok Post also reported that the RCEP talks are not likely to conclude until February, 2020 as "a major country, believed to be India still has concerns." The newspaper also said that the trade negotiations have been dragged on far longer than expected "in large part because of disagreements between India and China over how much access should be allowed to each other's market."
The daily also cited Kyodo News to suggest that the leaders of 16 nations are likely to commit to signing an agreement on creating world's largest free trade area in the year 2020 as a part of the joint statement which will be released after their scheduled summit on November 4 (Monday).
The RCEP trade deal is being negotiated among the 10-country Association of South East Asian Nations (ASEAN), China, Australia, New Zealand, Japan, South Korea and India for the last seven years.
Also Read: Infographic: Can India afford RCEP exit?
If signed, RCEP, whose countries' cumulative gross domestic product (GDP) is $49.5 trillion, or approximately 39 per cent of global GDP, will be the world's largest economic bloc.
Meanwhile, India also has existing FTAs with Japan and South Korea, making its discussions with China the most critical element of this deal.
If the RCEP Leaders' Summit concludes with a call for a renewed commitment and extended deadline, the prime minister Narendra Modi-led NDA government may divert its energies to win the perception war back home as the Indian industry, specifically the MSME sector is known to be quite wary of the Chinese threat to its existence. And with the hit the domestic industry is taking from cheap Chinese imports, opening up a tariff-free route for it is the last thing India can afford.
To sensitise the MSMEs of the opportunities FTAs provide, a High-Level Advisory Group (HLAG) headed by economist Surjit S. Bhalla, had recently favoured India signing these agreements with trade partners.
It called for a sustained medium- term advocacy programme to spread awareness about potential FTAs and opportunities for utilisation of FTAs among MSMEs of the country.