Prime Minister Narendra Modi on Monday chaired a meeting on RCEP, a proposed trade agreement between 10 Asean states and six other countries, to assess negotiations that have entered the last phase amid considerable pressure on India to join the mega free trade pact, according to officials familiar with the matter.
However, domestic industry and affiliates of the Rashtriya Swayamsevak Sangh (RSS) have expressed concerns about RCEP possibly leading to a deluge of Chinese goods in the Indian market.
The meeting, attended by home minister Amit Shah, finance minister Nirmala Sitharaman, commerce minister Piyush Goyal and external affairs minister S Jaishankar, came ahead of a meeting of trade ministers of the 16 countries negotiating the Regional Comprehensive Economic Partnership (RCEP) in Bangkok during October 10-12.
Goyal is expected to participate in the Bangkok negotiations, which will probably be the last meeting of the trade ministers of the proposed RCEP states — 10 members of Asean (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam) and its six FTA partners (China, Japan, India, South Korea, Australia and New Zealand).
A joint statement issued after the last such meeting in Thailand in September said ongoing global uncertainties had added to the urgency to conclude RCEP.
There was no official word on Monday’s meeting but two officials, who spoke on condition of anonymity, said India should be “very careful” in the negotiations because of their wide-ranging implications, particularly on Indian farmers and dairy cooperatives.
The government has received several representations from the dairy industry about concerns on giving concessional access to Australia and New Zealand for supplying milk and milk products.
In recent months, Asean members have proposed the text of RCEP could be finalised and signed this year, with contentious issues such as tariffs and market access to be taken up in an annexure. India has mooted an “auto trigger” safeguard that would come into play when imports, especially from China, crossed a certain threshold.
Under the proposed agreement, India is expected to reduce or eliminate duties on about 74% to 80% of goods imported from China. A Mint report said that China is unwilling to offer tariff elimination in 90% of traded goods.
The department of commerce has been consulting all stakeholders on matters related to RCEP and has had more than 100 consultations in the past six years that covered a wide spectrum of the economy, including agriculture, chemicals, petrochemicals, pharmaceuticals, plastics, textiles, ferrous and non-ferrous metals, automobiles and machinery, one official said.
Industry feedback has been taken on key issues such as rules of origin, sanitary and phytosanitary (SPS) and technical barriers to trade (TBT), anti-dumping, countervailing duties, safeguards and intellectual property rights, this official added.
“What to talk about small farmers, even leading milk cooperatives have expressed concern over RCEP. Those who want India to sign RCEP may argue that giving access to a small country like New Zealand would not make much difference, but once they come in, the entire [business] cooperative character of Indian milk supply chain will collapse. Small farmers with one or two cows would be the worst victims,” a second official said.
“RCEP will have impact at the village-level. It will impact farmers, panchayats and local bodies. Therefore, India needs to do a lot more intense negotiations,” said a third official who was aware of the negotiations.
At a time when an affiliate of its ideological mentor, the RSS, has raised concerns over India signing the RCEP, the Bharatiya Janata Party (BJP) on Monday began consultations on the issue with stakeholders.
BJP general secretary (organisation) BL Santosh and the spokesperson on economic affairs, Gopal Agarwal, met stakeholders from the industry to seek their views at a roundtable at the party headquarters.
“RCEP, FTA and trade relationships are very important in the global arena for the domestic industry, economy and common men. Therefore, BJP took an initiative to call stakeholders from industry, think tanks, activists and opinion makers to get their feedback on various concerns and the way forward. Many had concerns but there are many segments that want the country to move ahead in this direction with proper negotiations,” Agarwal said.
According to a person aware of developments, the participants made three proposals – to put off the RCEP for some time, to have an agreement with safeguards, or to not sign at all. The issue of “trade asymmetry” and India’s trade deficit of almost $55 billion with China were also raised.
The Swadeshi Jagran Manch (SJM), RSS’s affiliate on economic affairs, has urged the government not to sign the agreement, pointing out it will hurt India’s interests in sectors such as dairy.
Last Saturday, SJM national co-convener Ashwani Mahajan said in a statement the commerce ministry is trying to sell an “auto-trigger” safeguard mechanism as “one shot protection” for domestic small businesses and farmers from the adversities of RCEP.
The SJM argued that since RCEP requires members to cut their tariffs on a majority of products to zero, India would be adversely affected as it already has a trade deficit with 11 of the 16 nations.
