Na­tional in­ter­est to guide RCEP deal

Goyal says free trade pact can’t be held hostage by one or two do­mes­tic in­dus­tries

Business Standard - - FRONT PAGE - SUBHAYAN CHAKRABORT­Y

Any agree­ment on the pro­posed Re­gional Com­pre­hen­sive Eco­nomic Part­ner­ship (RCEP) deal would be based on na­tional in­ter­ests, Com­merce and In­dus­try Min­is­ter Piyush Goyal said on Wed­nes­day. He, how­ever, warned that while the gov­ern­ment would strive to pro­tect the in­ter­ests of a ma­jor­ity of in­dus­tries, the over­all dis­cus­sion could not be hi­jacked by one or two sec­tors.

“As long as In­dia's do­mes­tic in­dus­try and our na­tional in­ter­ests are pro­tected, the faster it (the RCEP) is done, the bet­ter for In­dia,” Goyal said. “Any agree­ment that In­dia finalises will en­sure that in­dis­crim­i­nate im­ports don't come in, while ma­jor op­por­tu­ni­ties for ex­ports and job cre­ation are re­served,” he added.

The RCEP is a pro­posed pact be­tween the 10-na­tion As­so­ci­a­tion of the South­east Asian Nations (Asean) bloc and six of their free trade agree­ment (FTA) part­ners — New Zealand, Aus­tralia, China, In­dia, Ja­pan, and South Korea.

Del­e­gates from RCEP nations will be in New Delhi on Sep­tem­ber 14-15 to dis­cuss ideas to move for­ward on the deal. Most of the mem­bers, led by the Asean bloc, have been push­ing hard for fi­nal­is­ing the deal by 2019-end.

In­dus­try di­vided

Stress­ing that most in­dus­tries were in favour of the deal, Goyal said some of the op­po­nents had not un­der­stood the de­tails of the RCEP yet. “Not everybody is op­pos­ing the RCEP. We are lit­er­ally ver­ti­cally split, with half the in­dus­try say­ing it should be brought quickly," Goyal said.

Cot­ton tex­tile ex­porters have also re­quested a speedy con­clu­sion to the ne­go­ti­a­tions, cit­ing an 8 per cent duty that hin­ders their chances of ex­port­ing to China, Goyal added.

Goyal had told lead­ers from Asean in July that In­dia’s do­mes­tic in­dus­try was not con­vinced that the pro­posed RCEP deal would cre­ate a “win-win sit­u­a­tion for all” by en­sur­ing bal­anced out­comes for both goods and ser­vices. A re­port on the RCEP, com­mis­sioned by the Con­fed­er­a­tion of In­dian In­dus­try and sub­mit­ted to the gov­ern­ment, has rec­om­mended that prod­ucts — the trade of which is dom­i­nated by China — should not be in­cluded for tar­iff re­duc­tions un­der the RCEP. Many min­istries, in­clud­ing agri­cul­ture, steel, chem­i­cals and MSME, among oth­ers, have also op­posed the deal.

Har­ness­ing FTAS

“Look­ing at the past ex­am­ples of other coun­tries which have used FTAS very ef­fi­ciently and ef­fec­tively, my own sense is that we can also use these ex­tremely well," Goyal said. He added the gov­ern­ment was also look­ing at do­mes­tic mea­sures to en­sure the in­dus­try was com­pet­i­tive and could take ad­van­tage of the con­ces­sions al­lowed to them un­der the FTAS.

These mea­sures in­clude mega ses­sions with ex­porters that teach how to use FTAS prop­erly. Ac­cord­ing to a study by the NITI Aayog, the util­i­sa­tion rate of trade deals by In­dian ex­porters is very low (be­tween 5 and 25 per cent). Goyal also trained his guns on com­pa­nies that have not taken ad­van­tage of the deals ei­ther due to lack of knowl­edge or ef­fort, or due to the “com­fort of a pro­tected do­mes­tic mar­ket”.

The min­is­ter squarely blamed the ear­lier gov­ern­ments for not be­ing able to ne­go­ti­ate bet­ter trade deals for In­dia, which has led to a sit­u­a­tion where the in­dus­try has not been able to ben­e­fit from FTAS. The Asean-in­dia FTA did not have an au­to­matic re­view mech­a­nism built into it, Goyal said.

“Af­ter al­most 10 years of im­ple­men­ta­tion, im­ports have grown faster than ex­ports. In­dian in­dus­try also had to suf­fer from the cir­cum­ven­tion of rules of ori­gin, across prod­ucts,” T V Naren­dran, CEO & man­ag­ing di­rec­tor of Tata Steel, said.

Com­merce and In­dus­try Min­is­ter Piyush Goyal

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