Countries negotiating the proposed Regional Comprehensive Economic Partnership (RCEP) have now decided on a final 10-day window to bilaterally sort out pending differences in the mega trade deal, after which the leaders of the 16 nations will step in.
With last week’s ministerial meet proving inconclusive, a decision on crucial trade differences in 14 areas — if not resolved — will be taken by Prime Minister Narendra Modi when he attends the 3rd RCEP leaders’ summit next month.
“All issues not closed by October 22 will be taken up by the leaders when they meet on November 4 in Bangkok,” a source in the know said.
Beginning Monday, India has started talks with other nations on an “automatic trigger safeguard mechanism” that ensures higher tariffs will kick in once imports reach a threshold while also pushing to finalise the levels of tariff reduction it will allow for other RCEP members. Beijing had earlier rebuffed the plan to impose an import ceiling for its exports — the first time New Delhi is attempting such a mechanism in any trade deal.
Earlier, India had agreed to reduce tariffs on 74 per cent of traded goods for China. While developed nations have demanded New Delhi open up at least 90 per cent of all items, China has refused to open up “commensurate to India’s demands”, an official said.
Currently, it is broadly accepted the RCEP will lead to tariffs being eliminated on 28 per cent of the traded goods to begin with. This will be followed by 35 per cent of all products being eliminated in phases.
Between the lines
Officials are also pushing to secure exceptions for India on trade issues, sources said. Prime among these is New Delhi’s opposition to demands of other nations on securing trade concessions provided by India in the domestic space. Known as “ratchet” in trade terminology, the concept implies that any policy changes will be automatically committed under the RCEP agreement to all members after a fixed period.
While India had communicated its intention to allow sectoral concessions in the services and investments segments, richer nations have continued pushing for similar concessions in goods trade as well.
Talks have faltered on providing MFN (most favoured nation) status to all partners. This promises that India will provide investment- or services-related concessions given to a trading partner under a bilateral treaty automatically to RCEP members without any time gap.
New Delhi may not extend MFN benefits to other RCEP nations on certain items. India has also sought to extend the date for duty cuts from the initially planned 2014 to 2019, because it has raised customs duties on more than 3,500 products since 2014, sources said.
The 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 Asean has trade deals — New Zealand, Australia, China, India, Japan, and South Korea.
So far, there have been 29 rounds of negotiations, apart from multiple minister-level meets.