RCEP talks: Civil society concerned over tariff cuts, investment norms

Measures could increase chances of foreign firms initiating legal action against India

Possible cutdowns in agricultural tariffs and investment may increase chances of foreign firms initiating legal actions against India, several civil society groups said while flagging off a number of serious concerns over the ongoing negotiations for the Regional Comprehensive Economic Partnership (RCEP).

On Wednesday, civil society groups across a wide spectrum of industries laid forth a host of concerns regarding the 19th round of RCEP negotiations, which began on Tuesday in Hyderabad.

The RCEP is a proposed free trade agreement (FTA) between the 10 countries of the Association of Southeast Asian Nations (Asean) and six others with which this bloc has FTAs with namely, Australia, China, India, Japan, South Korea, and New Zealand.

The current round of negotiations is expected to see members finalising the broad contours of the agreement. However, with most chapters on goods trade yet to see full discussions, members may make their second round of offers on tariff reduction, a senior government official recently said under conditions of anonymity.

"Cutting down agricultural tariffs will basically mean giving away market access to nations like Australia, Japan and New Zealand who are major producers of dairy, meat and seafood, " Ranjana Sengupta from NGO Third World Network said.

Also, their high levels of product standards will effectively nullify the chances of Indian exports making it to there, she added.

The official mentioned above had added that India is willing to offer reduction on 80 per cent of all tariff lines with a 6 per cent deviation for nations. The country may offer a maximum 86 or 74 per cent reduction in tariffs for nations, keeping into account the gamut of trade with them.

However, other nations have pressured keeping the deviation to 1-2 per cent. Richer countries like New Zealand and Australia have continued to clamour for opening up to 92 per cent of all goods items.

Trade experts also pointed out that Japan and Australia are also among the largest provider of farm subsidies to farmers and therefore have a robust export-oriented agricultural sector.

On investment discussions, the same nations along with the tacit support of China are pushing for less strict investment rules that allow the maximum headway to foreign entities to sue the government in cases of investor state dispute settlement.

This includes allowing such firms to directly start international proceedings against a nation without taking recourse to existing domestic legal options, something which India doesn't support, investment norms expert Kavaljit Singh said. He added that these nations also want the 'most favoured nation status' to be put in place for investment norms, while India doesn't.

The country wants to negotiate the rules based on the new model bilateral investment treaty (BIT), a template for individually negotiated agreements that govern private investments from a firm in one country into another.

The BIT template is a step up from the erstwhile bilateral investment promotion agreements India had earlier signed with 83 countries and had later terminated.

Also, patient care groups have also raised concerns with the proposed intellectual property norms that may stop production of affordable Indian generics that make life-saving medicine available to millions across the globe.

"More than 17 million people across the developing world from India and beyond rely on such drugs to combat AIDS. Patients need to take pills twice or thrice in a day, each of which used to earlier cost an average $1,000. Indian drugs have managed to bring down the costs to about $20,000 for three months of treatment", Henminlun Gangte from the International Treatment Preparedness Coalition said.

RCEP in India

• 19th round of negotiations on proposed trade pact started on Tuesday in Hyderabad
• Nations expected to frame broad contours of agreement
• Richer nations want drastic reduction in trade tariffs for upto 92% of goods
• Also, favour relaxed rules on Investor State Dispute Settlement favouring commercial entities
• Generic life saving drugs also under fire under proposed IP norms