Speaking in Rajya Sabha on RCEP, Goyal said: “Any trade deal like RCEP must consider that countries have very different sizes and population, unequal levels of economic development and human development indicators, contrasting levels of prosperity, investment capacity, cultural diversity and significantly different political and judicial systems.”
Commerce and industry minister Piyush Goyal on Tuesday said India pulled out of the RCEP trade deal as its concerns over a host of critical issues — ranging from risks to farmers, market access and non-tariff barriers to trade to strict rules of origin — were not addressed. He also promised to “correct the asymmetry” in existing free trade agreements (FTAs) with Asean, Japan and South Korea.
Speaking in Rajya Sabha on the Regional Comprehensive Economic Partnership (RCEP), Goyal said: “Any trade deal like RCEP must consider that countries have very different sizes and population, unequal levels of economic development and human development indicators, contrasting levels of prosperity, investment capacity, cultural diversity and significantly different political and judicial systems.” During RCEP meetings, India highlighted that it has a relatively low per capita GDP, compared with others in the grouping, and there are concerns about the livelihood of our farmers and employment generation provided by the industrial sector, particularly the MSMEs.
“India focused on its demand for a level-playing field, fair trade practices, transparency and market access. We also repeatedly cited serious concerns regarding the non-tariff barriers to trade, and opaqueness in the subsidy regime in some RCEP countries, and sought credible resolution of such issues,” Goyal said.
“In addition, to be able to take advantage of regional value chains, all countries must ensure that the rules of origin are not circumvented. Since, RCEP in its current form did not adequately address our concerns, joining it would be unfair to our interests.”
While India has opted out, countries like Japan are keen on India joining back the deal. Goyal on Tuesday didn’t give any hint of India getting back at the RCEP negotiating table any time soon.
“The government’s priority is also to correct the asymmetry in the existing agreements and maximise its export potential to benefit domestic industry and farmers,” the minister said. “We are working with our existing FTA partners like South Korea and Japan to address our concerns. We have also secured an agreement to initiate a review of Asean-India Trade and Goods Agreement…”
Goyal hit out at the Congress-led UPA government for having signed scores of FTAs (with Asean, South Korea, Malaysia and Japan), which only exacerbated India’s trade imbalance vis-a-vis these trading partners and put the interests of domestic industry in jeopardy. “A major reason has been that India gave much larger market access to some of these countries but received less in return,” he said. For example, in the Asean-India FTA (AIFTA), we enabled greater market access by eliminating tariffs on 74.4% lines, however, some of the Asean countries eliminated tariffs on only 50.1% and 69.7% lines, he added.
Consequently, India’s trade deficit with FTA partners grew substantially. The trade deficit with Asean jumped more than four times – from $5 billion to $21.8 billion —from 2010-11 through 2018-19. The deficit with all the RCEP countries increased more than 9 times in a decade — from $7.1 billion in FY04 to $65.1 billion in FY14.
It may be noted that in the case of China alone, India’s trade deficit rose 33 times, from $1.1 billion in FY04 to $36.2 billion in FY14. He also questioned the UPA government’s decision to get into the RCEP negotiation in 2012, despite the experience of growing trade imbalance with FTA partners.
“It is interesting that in 2006, the (UPA) government was exploring a trade agreement with China, and a recommendation was made to the Trade and Economic Relations Committee (TERC) headed by the Prime Minister for conclusion of such an agreement with China. However, it was not pursued further given concerns over the widening trade deficit,” he said.