India decides against signing RCEP trade deal, says terms not favourable

PM Modi is said to have stated that in its present form, the agreement does not fully reflect the basic spirit and the agreed guiding principles of RCEP

India on Monday decided against joining the 16-nation Regional Comprehensive Economic Partnership (RCEP) trade deal, saying it was not shying away from opening up to global competition across sectors but had made a strong case for an outcome which is favourable to all countries and all sectors.

According to sources, in his speech at the RCEP summit, Prime Minister Narendra Modi said that "the present form of the RCEP Agreement does not fully reflect the basic spirit and the agreed guiding principles of RCEP. It also does not address satisfactorily India's outstanding issues and concerns in such a situation."

Sources said there would be no compromise on the country's core interests and RCEP agreement does not reflect its original intent and the outcome is not fair or balanced.

The key issues include inadequate protection against import surge, insufficient differential with China, possible circumvention of rules of origin, the base year remaining as 2014 and no credible assurances on market access and non-tariff barriers.

The prime minister had earlier said that India remained committed to a comprehensive and balanced outcome of RCEP negotiations and seeks balance across goods, services and investments and also within each pillar.

The RCEP comprises 10 ASEAN nations and six of its FTA (free trade agreement) partners — China, India, Japan, South Korea, India, Australia and New Zealand. The RCEP aims to facilitate the creation of the biggest free-trade region in the world as the 16-nation grouping is home to 3.6 billion people, or nearly half the world's population.

On Saturday, the trade ministers from 16 RCEP countries failed to resolve the outstanding issues identified by India, though back-channel talks continued on the sidelines of the ASEAN summit to resolve the sticky issues.

India has been forcefully raising the issue of market access as well as protected lists of goods mainly to shield its domestic market as there have been fears that the country may be flooded with cheap Chinese agricultural and industrial products once it signs the deal.

The RCEP negotiations were launched by ASEAN leaders and six other countries during the 21st ASEAN Summit in Phnom Penh in November 2012. The objective of launching RCEP negotiations was to achieve a modern, comprehensive, high-quality, and mutually beneficial economic partnership agreement among the ASEAN member States and its FTA partners.