Earlier last month, amid persisting differences, RCEP members had decided that all issues must be settled by negotiators by October 22.
Ahead of a leaders’ summit on Monday in Thailand where a deal on the 16-nation Regional Comprehensive Economic Partnership (RCEP) is expected to be announced, commerce and industry minister Piyush Goyal on Friday met Chinese vice-minister of commerce Wang Shouwen at the 35th Asean meet in the east Asian nation. The two ministers “discussed bringing a trade balance between the two nations while curbing market-distorting trade practices’.
Hard last-minutes negotiations on RCEP between India and others — including China — are expected over the weekend in Thailand, which will see India fiercely pitching for safeguard mechanisms to protect its domestic industry from any onslaught of dumping, a senior government official said.
These talks will prepare the ground for the announcement of broad contours of the deal at the leaders’ summit, which will be attended by Prime Minister Narendra Modi, along with the heads of other RCEP member
countries. Modi will be in Thailand from November 2 to 4 to attend the Asean, East Asian and RCEP summits.
While most of the over two dozen issues relating to the RCEP are settled, differences on certain critical ones —including tariffs, safeguards and rules of origin — with countries like China are yet to be resolved. India has shown its keenness to be in the grouping provided interests of its industry are protected.
Earlier last month, amid persisting differences, RCEP members had decided that all issues must be settled by negotiators by October 22. The issues that were not resolved by October 22 were to be frozen for a decision only by the leaders (heads of states), before they meet on November 4 to announce the RCEP deal. Trade ministers and negotiators of the 16 nations have to present to their respective leaders which issue can or can’t be settled now so that appropriate announcement can be made at the leaders’ summit, according to the source. However, New Delhi will have the scope to settle its differences with countries like China bilaterally even later.
In the last meeting of RCEP trade ministers that ended on October 12 in Bangkok, no joint statement came out due to the persisting differences. Safeguards for domestic industry, particularly, remain a crucial part of India’s negotiations. India has been planning to employ an “auto-trigger” safeguard mechanism for imports from not just China but also Australia and New Zealand to better protect domestic players from irrational spike in imports. This mechanism will typically come into play once imports of a particular sensitive product breach a stipulated limit. Similarly, New Delhi wants the flexibility of a snapback — or transitional safeguard — mechanism for all RCEP members.
Most RCEP members want to conclude the negotiations and announce a deal in 2019 so that it can be formally signed in 2020 (after the announcement by the leaders). Some of them are upset with what they call India’s “recalcitrance” in sealing a deal early.
As for New Delhi, the RCEP deal faces fierce resistance not just from industries, including steel and dairy, but also the government departments overseeing these sectors, thanks to persisting fears of dumping by countries like China. Fisheries, animal husbandry and dairying minister Giriraj Singh is the latest to ask the commerce ministry to keep the dairy sector out of the RCEP. The steel ministry has already expressed fears about dumping from China. Recently, the Congress party also stepped up its opposition to the trade deal.
Even without the mega regional trade deal, India’s merchandise trade deficit with China stood at $53.6 billion in FY19, or nearly a third of its total deficit. Its deficit with potential RCEP members (including China) was as much as $105 billion in FY19.
The RCEP is a proposed mega trade pact between the 10 Asean members, India, Australia, China, Japan, South Korea and New Zealand. According to initial estimates, it accounts for 25% of global gross domestic product, 30% of trade, 26% of foreign direct investment flows and 45% of population.