India’s decision not to join RCEP taken in national interest
New Delhi, Nov 04: India has decided not to join RCEP. India's decision will greatly help India's farmers, MSMEs and dairy sector.
India's stand is a mixture of pragmatism, the urge to safeguard interests of the poor and the effort to give an advantage to India's service sector. While not shying away from opening up to global competition across sectors, India made a strong case for an outcome which is favourable to all countries and all sectors says sources.
Indeed, India was consistent in raising these issues right from day one during the RCEP negotiations. Some issues on which India made its stance clear included the threat of circumvention of Rules of Origin due to Tariff Differential. India pushed for a fair agreement which addressed the issues of trade deficits and opening of services.
India also asked for safeguard mechanisms to prevent against import surges and safeguard the interests of domestic industry. India also raised the unviability of MFN obligations where India would be forced to give similar benefits to RCEP countries that it gave to others. There was also no credible assurance for India on market access and non-tariff barriers. India also had very valid concerns on keeping 2014 as the base year for tariff reductions.
[Opposition leaders meet to discuss economic issues, RCEP trade deal]
Gone are the days when Indian negotiators craved in to pressures from the global powers on trade issues. This time, India played on the front foot, stressing on the need to address India's concerns over trade deficits and the need for other countries to open their markets to Indian services and investments.
PM Modi's firm stand:
In his speech at the RCEP summit, PM Modi said that "India stands for greater regional integration as well as for freer trade and adherence to a rule-based international order. India has been pro-actively, constructively and meaningfully engaged in the RCEP negotiations since inception. India has worked for the cherished objective of striking balance, in the spirit of give and take.
Today, 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 spirt and the agreed guiding principles of 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.
[To be or not to be: Why India is wary of joining RCEP?]
Our
farmers,
traders,
professionals
and
industries
have
stakes
in
such
decisions.
Equally
important
are
the
workers
and
consumers,
who
make
India
a
huge
market
and
the
third
biggest
economy
in
terms
of
purchasing
power
parity.
When
I
measure
the
RCEP
Agreement
with
respect
to
the
interests
of
all
Indians,
I
do
not
get
a
positive
answer.
Therefore,
neither
the
Talisman
of
Gandhiji
nor
my
own
conscience
permit
me
to
join
RCEP.
Thousands of years before RCEP was conceived, Indian traders, entrepreneurs and common people built abiding contacts with this region. For centuries, these contacts and ties made valuable contribution to our shared prosperity."
This is not the first time that Indian Government under Prime Minister Narendra Modi has demonstrated a strong resolve in matters of international trade and related negotiations. US President Trump who is known for his negotiation skills has himself called PM Modi a tough negotiator. Even Obama aide Ben Rhodes has written in detail on how President Obama had a hard time convincing PM Modi during the Paris climate change summit.
UPA's
weak
record
in
protecting
Indian
interests
in
global
trade
negotiations
India
signed
FTA
with
ASEAN
and
South
Korea
in
2010.
It
also
signed
FTA
with
Malaysia
and
Japan
in
2011.
[PM Modi returns from Thailand: The highlights of the trip]
The
government
during
UPA
opened
74%
of
its
market
to
ASEAN
countries
but
richer
countries
like
Indonesia
opened
only
50%
for
India.
Govt
of
India
under
UPA
also
agreed
to
explore
an
India-China
FTA
in
2007
&
join
RCEP
negotiations
with
China
in
2011-12.
The
impact
of
these
decisions
has
resulted
in
India's
trade
deficit
with
RCEP
nations
increasing
from
$7
Billion
in
2004
to
$78
Billion
in
2014.
Indian domestic industry is still reeling under the impact of these decisions. Government under PM Modi has sought to solve these issues and these negotiations are continuing. It is therefore evident that India could not sign a further unequal deal under RCEP without resolving past issues in previous FTAs including ASEAN and ensuring a strict and fair framework in RCEP.
Here are a series of such pro-Indian industry steps taken so far:
- Korean FTA review started 3 years ago and is being fast-tracked.
- Poor negotiations under previous Government of FTAs caused harm to Indian industry and led to distorted trade balance. India has already secured agreement in ASEAN for a review of the FTA.
- A Joint Working Group is discussing the issues to be addressed in Japan FTA on 18/11 and will also discuss review of FTA.
- Various industries especially farmers, small scale and handloom sector are benefitting from decisions taken on imports.
- Import of Agarbatti put from 'Free category' to 'Restricted category' - This has boosted domestic industry especially small scale sector.
- Suitable safeguard duty of 5% imposed on palm oil to address import surge and protect the interest of the domestic industry. This will benefit Indian farmers as well.
- In order to safeguard the interest of local cashew planters, Minimum Import Price of Cashew Kernel Broken from Rs.288per kg to Rs.680 per kg and Cashew Kernel Whole from Rs.400 per kg to Rs.720 per kg.
- In order to ensure remunerative price to the farmers, import of peas and pulses has been restricted and import of only 4 lakh MT of Toor and 3 lakh MT of Moong and Urad has been allowed for the fiscal year 2019-20.
- In order to monitor the import of Steel, a Steel Imports Monitoring System (SIMS) has been launched. All stakeholders will have advance information about the imports of different steel products and it will enable timely policy interventions.
- In order to mitigate the shortages of maize (feedgrade) for poultry and dairy farming, import of 5 lakh MT of feed-grade Maize has been allowed at lower 15% customs duty instead of normal customs duty of 50%. This will boost poultry production and dairy farming.
- India has been at the vanguard in protecting the interests of the poor especially the agriculture sector.
- India managed to protect its farmers' interests and ensure food security for its poor in WTO in Buenos Aires under PM Modi.
- India has secured international support for Indian small fishermen - India's plan for small fishers gets backing of 80 countries.
- India will continue to pursue its economic and strategic interests.