China bor­der ten­sions cloud Asia trade pact talks in In­dia

Muscat Daily - - BUSINESS -

New Delhi, In­dia - A meet­ing of 16 na­tions in In­dia on a mega Asia trade pact is hap­pen­ing in the shadow of el­e­vated bor­der ten­sions be­tween In­dia and China, a wrin­kle that could fur­ther slow progress on the deal.

Trade of­fi­cials gath­ered in the south­ern city of Hyderabad are seek­ing to ham­mer out agree­ment on sticky is­sues like the free move­ment of peo­ple in the pact that takes in the world’s sec­ond and third-big­gest economies - China and Ja­pan - but does not in­volve the US.

China is urg­ing the ten mem­bers of the As­so­ci­a­tion of South­east Asian Na­tions (ASEAN), along with In­dia, Aus­tralia, New Zealand, South Korea and Ja­pan, to wrap up the Re­gional Com­pre­hen­sive Eco­nomic Part­ner­ship (RCEP) as soon as pos­si­ble. Still, In­dia’s re­luc­tance to cede on its de­mand for greater mar­ket ac­cess for its pro­fes­sion­als has hin­dered the process.

In­dia is mak­ing it clear it won’t rush to­ward an early con­clu­sion of the trade talks and is in­sist­ing on mo­bil­ity for its highly-skilled work­ers. That de­mand has raised con­cern among ASEAN na­tions who view such a move as a po­ten­tial threat to their do­mes­tic economies.

The bat­tle lines have been drawn, said Ami­tendu Palit, a se­nior re­search fel­low at the In­sti­tute of South Asian Stud­ies at the Na­tional Univer­sity of Sin­ga­pore.

“The chal­lenge for RCEP is that China would want a quick end to the deal so that it can es­tab­lish it­self as a leader of world trade,” said Palit. “Ja­pan, New Zealand won’t be in favour of con­clud­ing early as they would want a high qual­ity agree­ment. How­ever RCEP is a low-qual­ity agree­ment as it is not go­ing be­yond tar­iff cuts and in­vest­ment.”

Af­ter Pres­i­dent Don­ald Trump pulled the US out of the sep­a­rate 12 na­tion Tran­sPa­cific Part­ner­ship, all eyes are now on the Asia trade pact, which would ac­count for al­most 30 per cent of global GDP and over a quar­ter of ex­ports.

While the sit­u­a­tion re­mains tense along their bor­der, In­dia will ac­tively en­gage with China and other mem­ber na­tions in the talks. But it will in­sist that the deal rests on con­ces­sions re­gard­ing the ser­vice sec­tor, peo­ple with knowl­edge of the mat­ter said. In­dia is willing to give a bet­ter of­fer for broader tar­iff cuts on goods to RCEP coun­tries, although it ex­pects sim­i­lar con­ces­sions on ser­vices, the peo­ple said. The ser­vice sec­tor con­trib­utes over 50 per cent to In­dia’s GDP and any trade pact that fails to re­flect this lacks am­bi­tion and is not com­mer­cially mean­ing­ful, the peo­ple said.

In­dia is mak­ing it clear it won’t rush to­ward an early con­clu­sion of the trade talks and is in­sist­ing on mo­bil­ity for its highly-skilled work­ers

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