RCEP offers $125-bn market if domestic firms improve competitiveness: Study

Even though the government has decided to stay out of the world's largest trade block RCEP, the 15-nation grouping offers a market potential of $125 billion if domestic firms improve competitiveness in 24 identified product categories, as per a World Trade Centre study.
Citing domestic concerns, the government walked out of the 16-country Regional Comprehensive Economic Partnership (RCEP) in November last year.

The 15 RCEP countries together accounted for 57 per cent or $105 billion of India's overall trade deficit in FY19, with China itself contributing to $54 billion of this.
It can be noted that India is among the top 15 exporters of these 24 product categories globally and have strong demand in China, Korea, Australia, Japan, Indonesia, the Philippines, Malaysia, Thailand, Cambodia and Vietnam.
"The domestic industry can benefit from $125.6 billion market potential, especially in sectors like metals, textiles and marine products, in 10 of these RCEP countries," says the World Trade Center Mumbai, quoting the latest UN Comtrade data, which is the repository of international trade statistics.
India is the seventh largest exporter of aluminum products in the world and yet it is not a major supplier of these products to these RCEP countries except to Korea.
In 2018, Japan, Thailand, Korea and China together imported $18.65 billion worth of aluminium products, while India supplied hardly $700 million of these products to these market, as per the commerce ministry data.
India is the sixth largest exporter of man-made fabrics and its major export destinations are the US, Turkey, Brazil, Bangladesh and the UAE.
But there is an over $10-billion import demand for man-made fabrics in Vietnam, Indonesia, China and Cambodia.
Similarly, being the second largest exporter of textile yarns, India can benefit by meeting the $13.6-billion annual import demand from China, Korea, Japan and Vietnam.
Being the fourth largest exporter of bovine meat, India can help it grab a $11-billion market in select RCEP countries, says the WTC.
In textile yarns and man-made fabrics, domestic exporters face stiff competition from China, Korea, Vietnam and Indonesia.
But the trade body warns that it will be even more challenging for us to export to RCEP countries once this proposed mega trade agreement is ratified and signed by all the members. For instance, in case of man-made fabrics, leading exporters like Korea and China will have preferential market access to top importers such as Vietnam and Indonesia once the RCEP pact comes into force.

India opts out of RCEP; PM Modi says key issues remain unresolved

The government on Monday said India will not join the Regional Comprehensive Economic Partnership (RCEP) deal, adding that it would adversely affect national interest.
This was a nod by the government to concerns raised by domestic industry and farmers, most of whom had opposed the pact, fearing it would lead to uncontrolled dumping by China.

“India conveyed its decision to not join… (There are) significant issues of core interest and the impact it would have on the livelihood of vulnerable sections. India has participated in good faith in the RCEP discussions and had negotiated hard with a clear-eyed view of our interests,” said Secretary (East) in the Ministry of External Affairs, Vijay Singh Thakur, in Bangkok.
She added not joining the pact was the right decision at the moment.
Fifteen other nations, however, went ahead with the deal after the conclusion of the summit in Bangkok, which was also attended by Prime Minister Narendra Modi.
“Participating countries have concluded text-based negotiations for all 20 chapters and essentially all their market access issues; and tasked legal scrubbing by them to commence for signing in 2020,” said the joint statement issued after a meeting of RCEP leaders.
Negotiations, started in 2012, will now culminate in a final deal being signed by 2020, it added.
The nations have also left the door open for India — the largest untapped consumer and industrial market — in the bloc.
“All RCEP countries will work together to resolve these outstanding issues in a mutually satisfactory way. India’s final decision will depend on satisfactory resolution of these issues,” the joint statement added.
Sources said Modi informed the other leaders that the deal in its current form “does not fully reflect the basic spirit and the agreed guiding principles of RCEP”.
“When we look around we see during seven years of RCEP negotiations, many things, including the global economic and trade scenarios have changed. We cannot overlook these changes. The present form of the RCEP agreement does not fully reflect the basic spirit and the agreed guiding principles of RCEP,” he said.
The ambitious pact will now cover the 10 Association of Southeast Asian Nations economies (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam) and five others — New Zealand, Australia, China, Japan, and South Korea — with which the group has free-trade agreements (FTAs).
So far, 28 rounds of talks have concluded, apart from multiple minister-level meets as well as numerous technical rounds of talks.
Senior government sources said the decision may have been taken because of mounting pressure from domestic industry, which reached a fever pitch over the past six months amidst deepening economic slowdown.
India registered a trade deficit with as many as 11 RCEP member nations in 2018-19, with China topping the list.
“The widening trade deficit with China, widening to $53 billion in the last financial year prompted the government’s move to demand safeguards in the form of ‘import caps’ from China. However, Beijing’s refusal to allow such a mechanism hastened India’s exit from the pact,” a source said.

RCEP members await India's approval as it bargains hard for concessions

As negotiations to finalise the long-overdue Regional Comprehensive Economic Partnership (RCEP) enter the final stages, all eyes are on India as to whether it will take the plunge and agree to the world’s largest free-trade agreement (FTA) spanning 16 Asia-Pacific nations. According to diplomatic sources, except India, all the 15 RCEP member countries are on board in finalising the deal.
While no official statement was released after the ministerial meetings on Friday and Saturday, the pending issues on market access and services trade have not been resolved and continue to hold up an agreement, a source in the know said.

While India might support a formal announcement about the completion of talks with an ‘in-principle’ backing for the deal, it has clarified that it remains unhappy with the current status of offers made in various chapters of discussions, senior officials indicated. The resulting agenda prepared by the ministers will be discussed by Prime Minister Narendra Modi and other RCEP leaders in Nonthaburi, a city north of Bangkok, on Monday (November 4), the official deadline to close talks. The deadline will now be extended by a ‘couple of months’, they added.
Modi said that addressing India’s concerns over “unsustainable trade deficits” remained important and that opening the vast Indian market must be matched by openings in some areas where Indian businesses could benefit. “We have put forward reasonable proposals in a clear manner and are engaged in negotiations with sincerity.
We would like to see commensurate levels of ambition on services from many of our partners, even as we are ready to address their sensitivities,” Modi said in an interview to the Bangkok Post newspaper.
“Overall, we are clear that a mutually beneficial RCEP, in which all sides gain reasonably, is in the interest of India and of all partners in the negotiation,” he said. The prime minister will attend the 16th Asean-India Summit, the 14th East Asia Summit, and the third summit meeting of RCEP.
India registered a trade deficit with as many as 11 RCEP member nations in 2018-19, with China topping the list.
The annual Asean summit, a grouping of 10 influential countries, is taking place amid China's aggressive behaviour in the disputed South China Sea as well as in the Indo-Pacific region. The grouping will have separate summits with its dialogue partners like India, the US, Japan, Russia and China.
The Asean region along with India comprises a combined population of 1.85 billion people, which is one-fourth of the global population and their combined GDP has been estimated at over $3.8 trillion. Investment from Asean to India has been over $70 billion in the last 17 years, accounting for more than 17 per cent of India's total FDI.
While the Asean summit is likely to focus more on trade and investment-related issues, leaders at the East Asia Summit are expected to delve deep into issues relating to maritime security, terrorism, non-proliferation and migration. "The East Asia Summit (EAS) is today the leading element in the regional cooperative architecture, as a singular, leaders-led structure that is centred around Asean, and includes as members major countries in the region or with important interests in it. We will be reviewing significant regional and global issues on the Agenda of the EAS, and examining the state of our current programmes and projects," the PM said.
"I will also focus on our Indo-Pacific strategy, on which I am happy to note strong convergences with ASEAN partners and others at the EAS," he said.

RCEP's last leg: E-commerce, 'most favoured nation' are the new hurdles

Issues like mutual trade concessions under the “most favoured nation” (MFN) clause and e-commerce have emerged as the next big hurdles in the ongoing negotiations on the proposed Regional Comprehensive Economic Partnership (RCEP) pact, say sources.
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The RCEP is India’s most ambitious trade pact. Based on India’s existing free-trade agreement (FTA) with Asean, the RCEP will include all the nations with which the 10-nation bloc has trade deals — New Zealand, Australia, China, India, Japan, and South Korea. As nations race against time to bilaterally sort out differences in the mega trade deal, talks have faltered on providing MFN 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 all RCEP members without any time gap.
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RCEP should not lead to job losses, hurt Make in India: Automakers lobby

Proposed mega trade deal RCEP should not lead to job losses, and hurt the government's Make in India initiative, auto industry body SIAM cautioned on Friday ahead of the trade ministers' meeting of the bloc in Bangkok.
Trade ministers of RCEP countries will discuss issues related to investment, e-commerce, rules of origin and trade remedies in a meeting in Bangkok on October 12.

According to SIAM, while there has to be give and take being a part of the global economy, under such trade agreements imports of completely built units (CBUs) of automobiles must not be allowed.
"Being a part of global trade, there are gives and takes. What we are only saying is that the government should be mindful of two things and I am confident that the government is. Any such thing (RCEP and free trade agreements) should not result in job losses and hurt Make in India," SIAM President Rajan Wadhera told reporters here.
He was responding to a query on SIAM's views on RCEP.
The RCEP bloc comprises 10 Association of South East Asian Nations (Asean) nations (Brunei, Cambodia, Indonesia, Malaysia, Myanmar, Singapore, Thailand, the Philippines, Laos and Vietnam) and their six FTA partners - India, China, Japan, South Korea, Australia and New Zealand.
Wadhera further said,"No CBU import should be allowed (under the pact)."
Society of Indian Automobile Manufacturers (SIAM) has been maintaining that free trade agreements (FTAs) with competing countries do not benefit Indian automobile industry.
It has demanded that 28 items, including hybrid, electric cars and three-wheelers, be kept out of the purview of all such pacts.