Bound commitments on services to be India's main focus on RCEP talks now

New Delhi will have to negotiate on the tricky services trade issue as pressure from manufacturing behemoth China and the Asean grouping mounts on a speedy deal

India will be setting its eyes on securing binding commitments from member nations on services trade as negotiations on the Regional Comprehensive Economic Partnership (RCEP) pact reach a crucial stage in 2019.

India will also be assessing areas where the most progress can be made in 2019. Earlier this month, Prime Minister Narendra Modi joined leaders from nations in Singapore to pitch for an early conclusion of the pact by the end of next year. 

“Of the 161 sub-sectors under the services trade discussions, it’s our aim to secure binding commitments on at least 50-60 sectors on a priority basis” a senior commerce department official said on Monday. 

New Delhi will have to negotiate on the tricky services trade issue as pressure from manufacturing behemoth China and the Association of Southeast Asian Nations (Asean) grouping mounts on a speedy deal.

New Delhi has consistently focused on services trade norms, such as those allowing the free movement of trained professionals across national boundaries. This would effectively allow Indian professionals — such as chartered accountants, teachers, and nurses — to practice in other RCEP nations without the need for bilateral mutual recognition agreements. Since India has an abundance of trained labour interested in migrating while sending remittances back home, this is a prime focus area for the country. 

Commerce Minister Suresh Prabhu has said Indian firms have created more than 100,000 local jobs in RCEP countries, apart from cost savings and enhanced competitiveness, even with limited expatriate presence. 

At the latest talks in Singapore, the nations of China and Japan have supported India’s stance on the issue while Australia and New Zealand have expressed support for greater talks on overall services. 

“Talks have reached a critical juncture with discussions concluding on seven chapters as of now. This includes major ones like economic and technical cooperation, Customs procedures and trade facilitation, government procurement, and institutional provisions,” another commerce department official said.

India building bridges

The ambitious pact is proposed between 10 Asean economies and six others — New Zealand, Australia, China, India, Japan, and South Korea — with which the group has free trade agreements. So far, 24 rounds of talks have concluded, apart from six minister-level meets and two leaders’ summit.

Under planning since 2012, the talks have seen little movement since partner nations have been unwilling to concede on crucial issues. Since 2016, the Asean had repeatedly blamed India for holding up the talks but now nations are increasingly aligning with India on many issues, a trade negotiator said. This includes a meeting of minds on investment facilitation, which had been stuck over the issue investor-state dispute settlement (ISDS). 

The ISDS refers to a broad range of legal and policy norms regulating the process by which an investing private entity from another nation may seek legal recourse in the event of a dispute with the state. 

“While most nations were earlier against India due to our insistence that ISDS norms should be based on India’s model bilateral investment treaty, we see many coming round on the subject now,” the negotiator said.

Early end still doubtful

At the latest meet, Modi had stressed upon India’s latest position of a request for more time to decide on tariff rates, especially with the upcoming elections in 2019. However, more nations may now use the ploy since as many as five RCEP member nations are set to face the general elections in 2019.

Also, nations are yet to end all disagreements on goods trade. This includes the market access for foreign goods and reduction of import duties on them, discussion areas where India is gravely cautious since manufacturing powerhouse China is part of the arrangement. 

The country fears the RCEP pact will allow China to push its products at lower prices and finally capture the market, something it hasn’t been able to do so far since India’s import barriers remain high.