India decides to opt out of RCEP, says key concerns not addressed – The Economic Times

Experts also felt that joining the trade bloc without any sufficient safeguards would allow cheap Chinese goods to flood the Indian markets.

India has decided not to join the multi-lateral trade bloc Regional Comprehensive Economic Cooperation (RCEP).

India expressed its concerns over trade deficits and the need for other member countries to open markets for Indian services and investments.

“India has significant outstanding issues, which remain unresolved. All RCEP participating 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 read.

“The present form of the RCEP Agreement does not fully reflect the basic spirt and the agreed guiding principles of the RCEP. It also does not address satisfactorily India’s outstanding issues and concerns. In such a situation, it is not possible for India to join RCEP Agreement,” PM Modi said.

Rules of origin, e-commerce, auto-trigger mechanism and trade remedies are India’s key areas of concern. The crucial sticking point for India in RCEP is its trade deficit with China which is feared to increase once the pact is in place. The country has proposed different levels of tariff concessions for China to safeguard its domestic industry from cheap imports.

New Delhi has also been pushing to be able to use an auto-trigger mechanism that will allow it to check sudden import surges from China, more than once and also wants to change the base duties besides putting in place strict origin norms to ensure that only imported goods get duty concessions.

“The key issues include- inadequate protection against import surge,insufficient differential with China, possible circumvention of rules of origin,keeping the base year as 2014 and no credible assurances on market access and non-tariff barriers,” ANI quoted sources as saying.

The RCEP comprises 10 ASEAN nations and six of its FTA (free trade agreement) partners – China, India, Japan, South Korea, India, Australia and New Zealand. The RCEP aims to facilitate the creation of the biggest free-trade region in the world as the 16-nation grouping is home to 3.6 billion people, or nearly half the world’s population.

On Saturday, the trade ministers from 16 RCEP countries failed to resolve the outstanding issues identified by India, though back-channel talks continued on the sidelines of the ASEAN summit to resolve the sticky issues.

India has been forcefully raising the issue of market access as well as protected lists of goods mainly to shield its domestic market as there have been fears that the country may be flooded with cheap Chinese agricultural and industrial products once it signs the deal.

The RCEP negotiations were launched by ASEAN leaders and six other countries during the 21st ASEAN Summit in Phnom Penh in November 2012. The objective of launching RCEP negotiations was to achieve a modern, comprehensive, high-quality, and mutually beneficial economic partnership agreement among the ASEAN member States and its FTA partners.

RCEP has gained renewed momentum in the wake of the China-US trade war. The RCEP was in response to a similar trade bloc championed by the US called the Trans-Pacific Partnership. It was later shelved by the Donald Trump administration.

With inputs from PTI and the ET Bureau