RCEP negotiations may drag on beyond 2017

Talks on the proposed Regional Comprehensive Economic Partnership (RCEP), which had earlier targeted a 2017 deadline, may drag on to the next year. This is because the member nations are yet to agree on tariff reduction for goods while discussions on services have hit a wall.

While the members had supported finalising the broad contours of the agreement by the end of the year, a senior government official said most chapters on goods trade have not seen full discussions. With even lesser progress made on services and investment talks, it is informally understood the discussions would spill over into 2018, the official, who wanted to remain anonymous, said.

RCEP is a proposed free trade agreement (FTA) between the 10 countries of the Association of Southeast Asian Nations (Asean) and six others with which this bloc has FTAs — Australia, China, India, Japan, South Korea, and New Zealand.

Negotiations, which formally began at the end of 2012, have been pushed by the Asean nations, which want to achieve meaningful progress on RCEP before the end of the year since 2017 is the 50th anniversary of the bloc’s founding. The last ministerial meeting ended in Vietnam on Monday.

The members are expected to make their second round of offers on tariff reduction before the next meeting, scheduled to be held in Hyderabad on July 18-28.

India is willing to offer reduction on 80 per cent of all tariff lines with a six per cent deviation for nations, the official mentioned above said. Under this scenario, India may offer reduction in tariffs on 8674 per cent of goods for nations, taking into account the gamut of trade with them.

Other nations have supported keeping the deviation to one-two per cent. But, richer nations such as New Zealand and Australia want a reduction on up to 92 per cent of all goods items.

On services trade, where India is primarily interested in securing greater market access and easing restrictions in the sector, it is especially looking at opening up issues under Mode 4, which deals with cross-border migration of services professionals.

On this note, the Commerce and Industry Minister said in Vietnam that Indian companies had created more than 100,000 local jobs in the RCEP countries, apart from cost savings and enhanced competitiveness, even with limited expatriate presence.

Discussions on services trade have affected by global protectionism in the sector.

The issue of investor state dispute settlement remains the most contentious issue for India regarding talks on investment.