RCEP meet: India, China refuse to budge on tariffs, services trade

New Delhi resisted calls by most nations, which argued that India should slash existing tariffs on up to 90% of all goods

Positions on tariff reduction, services trade and investment facilitation have hardened during the latest negotiation round on the Regional Comprehensive Economic Partnership (RCEP) deal in Beijing, as the deadline gets nearer, said sources.

The ministerial part of the talks that is seeing trade ministers from member nations trying to reach a consensus on contentious issues began on Friday. 

“However, 13 of the 25 topics of discussion within the RCEP remained unfinished after the technical negotiations were over by Thursday,” said persons in the know. 

These include the crucial trade in services, movement of professionals across borders, investments, dispute resolution and rules of origin. As a result, the ministers are expected to have significantly less material to go forward on, at a time when the third RCEP summit is planned for early-November, they added.

RCEP is India’s most ambitious trade pact, currently under negotiation. Based on India’s existing free trade agreement (FTA) with the 10-nation Asean bloc, the RCEP will include all the nations with which the Asean has trade deals — New Zealand, Australia, China, India, Japan and South Korea.

So far, 26 rounds of talks have concluded, apart from six minister-level meets. The latest meet has seen a significant push by Asean nations, desperate to sign the deal soon, to get both India and China on the same page when it comes to tariff reduction. 

But New Delhi has apparently made it clear that significant tariff concessions have already been made and further talks would be based only after an equal push by China.

Issues galore

Commerce and industry minister Piyush Goyal skipped the ministerial meet. While extension of the current parliamentary session till August 7 had been given as the reason for his absence, sources hinted that it may have been a message to China. Goyal had earlier emphasised that India believes in the high ambition on goods’ tariff reduction. But he had warned that it will fall through only after the sensitives in bilateral pairings like India–China had been addressed through temporary and permanent deviations and exclusions.

New Delhi resisted calls by most nations, which argued that India should slash existing tariffs on up to 90 per cent of all goods. There were demands by developed economies such as Japan and Australia that India open up the market to specific products such as dairy and engineering goods.

The government has also been under pressure to review existing FTAs with South Korea and Japan, that haven’t been able to reduce India’s trade deficit with these nations.

New Delhi has consistently focused on services trade norms, such as those allowing the free movement of trained professionals across national boundaries. 

This would allow Indian professionals — such as chartered accountants, teachers and nurses — to work in other RCEP nations without the need for bilateral mutual recognition agreements.

China concerns

The domestic industry, across a broad range of sectors, has called for caution on India joining the deal. Fear of Chinese goods flowing into the country unhindered, if the deal goes through, has intensified among various industries at a time when major export sectors continue to struggle under falling global demand.