Trading bloc to India: Cut tariffs or exit FTA talks

The Regional Comprehensive Economic Partnership has asked India to either agree to eliminate tariffs on most products quickly or leave the talks on the proposed Free Trade Agreement (FTA).

Background:

RCEP members are upset over India’s protectionist stance, focusing only on the export of manpower and not on liberalising trade in goods and other services, as well as investment. They have issued this ultimatum being irked by what they perceive as New Delhi’s “obstructionist, defensive and half-hearted approach” that is “delaying” the conclusion of the talks.

What’s the demand?

Some member countries want India to take a long-term approach and agree to eliminate duties in goods (barring in a few sensitive sectors in agriculture & industrial goods) on a higher threshold within a decade to help India leverage the opportunities arising out of the Global Value Chain.

About Regional Comprehensive Economic Partnership:

The RCEP is among the proposed three mega FTAs in the world so far – the other two being the TPP (Trans Pacific Partnership, led by the US) and the TTIP (Trans -atlantic Trade and Investment Partnership between the US and the EU).

• The agreement (FTA) is proposed between the ten member states of the Association of Southeast Asian Nations (ASEAN) (Brunei, Burma (Myanmar), Cambodia, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand, Vietnam) and the six states with which ASEAN has existing FTAs (Australia, China, India, Japan, South Korea and New Zealand).
• RCEP negotiations were formally launched in November 2012 at the ASEAN Summit in Cambodia.
• RCEP is viewed as an alternative to the TPP trade agreement, which includes the United States but excludes China.