Is India Demanding Too Much from the RCEP Trade Pact?

India, which has a $50 billion trade deficit with Beijing, has concerns over its market being flooded by China.

Trade ministers pose for a photo during the third inter-sessional RCEP ministerial meeting in Hanoi, Vietnam.

(Photo: Reuters)

China is pushing to get the Regional Comprehensive Economic Partnership (RCEP) pact wrapped up fast. But the negotiations over the ambitious regional trade deal, which began over five years ago – with the 19th round of talks held in Hyderabad last month – look unlikely to conclude by the tentative year-end deadline.

After the Hyderabad round, members of the RCEP, a free trade agreement covering 16 countries in the Asia-Pacific region, are hoping to arrive at a positive conclusion during the 20th round to be held in Incheon, South Korea, in October.

The 16 RCEP countries – China, India, Japan, South Korea, Australia, New Zealand, and the 10-member ASEAN – represent more than 3.5 billion people and about 40 percent of global GDP.

India, which has an over $50 billion trade deficit with Beijing, has concerns over its market being flooded by goods from China and other nations once it further liberalises its tariff barriers for goods, as is being demanded.

India is pushing for a deal in the services sector, where it is in a leadership position, with liberalisation of services and freedom of movement for professionals. However, the talks in the field have remained inconclusive.

China’s Strong Position

According to former ambassador Rajiv Bhatia, “China already has a strong position in the RCEP negotiations as it is the biggest trading nation in the grouping, and also because it has a fairly advanced FTA with the ASEAN countries.”

“India cannot give very freely and liberally trade preferences to other countries, due to apprehensions that it would further jeopardise our own domestic industry. So, India has the more difficult challenge, and these countries, which have been relatively free market, are pushing India to make more concessions as far as the goods trade is concerned,” Bhatia, former Director General of the Indian Council of World Affairs, told IANS.

But, with regard to the services sector, India has sought better arrangements and more concessions as well as facilitation of free movement of professionals – but the other countries of the proposed FTA bloc are opposed to this. “So, you have a situation where there are pressures and counter-pressures,” Bhatia added.

Some Countries Unhappy With India’s Demands

According to international trade expert TS Vishwanath, what is holding up the negotiations in the area of services is that countries of the ASEAN, as well as South Korea and Australia, “are not open about some of the demands we have.”

“This is mostly regarding the movement of professionals in the information technology or BPO sector. They have issues, and are not very happy about it. They are putting pressure, saying, 'open up your markets for our products, manufactured goods,’” Vishwanath, principal adviser, APJ-SLG Law Offices, told IANS.

India has said it is willing to open up 65 per cent of its market for goods, but the countries want close to 90 to 95 per cent.

India has asked for the services agreement to be inked as a quid pro quo.

“On that everybody is keeping quiet. That is why it is taking a little while,” he added.

From what I understand, the industry in some other countries, like Singapore, Malaysia, Thailand, and Australia, say if India wants a higher opening for movement of professionals they may not be averse to it. There is some hope. But the governments there need to act, it has to come from the governments, not industry.

TS Vishwanath, international trade expert

“We are hoping that by December they may be able to get somewhere on these issues,” Vishwanath added.

‘India is Being Misunderstood’

According to economist Ram Upendra Das, “The negotiations in RECP are happening in a manner in which, in my view, India is being misunderstood.”

Das, who has been appointed the head of the just-opened Centre for Regional Trade, an autonomous institute under the Commerce Ministry, told IANS,

One of the things India has been saying is that they should open up temporary movement of people and professionals under Mode 4, which means our experts in health, IT, and software developers should be in a position to get the facility to go. The misunderstanding is that they (other countries) are confusing temporary movement of professionals with permanent migration.

Ram Upendra Das, chief of Centre for Regional Trade

“Just because any country signs a deal in services does not mean they will be swamped by professionals,” he added.

On the future of the negotiations, Bhatia said: “My considered view is that December is going to be a difficult deadline... Our government announced it would be ready in 2016, it did not happen. And now they are talking about the end of 2017. There is nothing firm about December 2017 as far as I know.”

(This article has been published in arrangement with IANS)

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