New Delhi to avoid FTAs that are actually trade pacts with China, say Indian officials.

India will not re-join the Regional Comprehensive Economic Partnership (RCEP) on the existing terms as its decision to walk out was primarily to protect the interests of the poor and vulnerable sections, including farmers and the small scale industry, a senior government official has said.

 

Fifteen countries, including the ten-member ASEAN, China, Japan, South Korea, Australia and New Zealand, signed the RCEP deal, which is a free trade pact covering goods, services and investments, on November 15, and decided to keep the door open for India, which was to be the sixteenth member of the bloc but had exited the negotiations last year due to differences.

 

Trade deficit

The possibility of India re-joining the talks, however, seems to be a distant proposition as the government’s stated policy now will be to avoid joining free trade agreements (FTAs).

 

Moreover, India’s trade deficit with RCEP nations increased from USD 7 billion in 2004 to USD 78 billion in 2014 while its deficit with China, currently, is more than USD 50 billion, the official said. The individual FTAs that India has signed with RCEP countries including ones with the ASEAN, South Korea and Japan, too, haven’t worked out to India’s advantage.

 

New Delhi, will instead now focus on possible FTAs with trading partners such as the EU and the US where Indian industry could gain increased market access, but it will continue to be careful, the official added.

 

India wanted tough ROO to prevent flooding of Indian markets with Chinese goods. It also sought an auto trigger mechanism for safeguard duties to protect industry against sudden surge in imports.

 

India did not want to give most favoured nation status in investments (which it gives only to its strategic allies) to all RCEP members, especially China. It also sought a change in the base rate of customs duty from 2014 to 2019 so that duty cuts take place from the levels that existed in 2019 (which is much higher for India in items like electronics).