The mega Asia-Pacific trade pact signed by 11 nations, including Japan and Singapore, is unlikely to dent India’s export prospects meaningfully due to the absence of its key market — the US — in it, official and trade sources said on Friday.
The mega Asia-Pacific trade pact signed by 11 nations, including Japan and Singapore, is unlikely to dent India’s export prospects meaningfully due to the absence of its key market — the US — in it, official and trade sources said on Friday. But the deal could see more pressure being piled on India to help conclude the 16-nation Regional Comprehensive Economic Partnership (RCEP) agreement at the earliest without being too emphatic about its own demands in services sector, they added. However, in the absence of the US, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) has lost much of its potential clout, as it will cut tariffs in nations that together make up for just over 13% of the global economy (with the US, it would have represented 40% of world GDP). “The new trade deal is unlikely to damage our export prospects. However, a precise assessment of the impact on India will be known once it’s ratified by individual members,” an official source said here. “The absence of the US in the new deal is a relief for India’s garment industry.”
The US was the original proponent of the TPP but President Donald Trump decided to withdraw from it as he said it would be “the death blow for American manufacturing”. The 11 other nations firmed up a revised trade agreement in January. That agreement will become effective when at least six members have completed domestic procedures to ratify it, expected to be over by the end of this year. “The CPTPP won’t impact India much. As such, six of the 11 CPTPP countries are already part of the grouping negotiating the RCEP in which India is also a participant,” said Biswajit Dhar, professor at Centre for Economic Studies and Planning of JNU. However, some of the stringent standards originally enshrined in the CPTPP, including in the labour sector, could make their way into the RCEP agreement as well. The CPTPP comprises member-nations such as Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. The labour-intensive garment industry could breathe easy, as fears of key competitor Vietnam gaining duty-free access to the US, India’s single-largest market for such products, abate. Vietnam has already beaten India as the world’s third-largest garment exporter and the threat from the nation had appeared more real, given that the US accounted for 22-30% of India’s garment exports in recent years and Indian exporters have to pay duty in the range of 14-32% for the shipment of textiles and garments there.