New Delhi: India plans to offer tariff elimination on more than 70% traded goods with China over an extended period of time under the ongoing negotiations for a Regional Comprehensive Economic Partnership (RCEP) agreement.
“One cannot go beyond 6% offer on either side of common concession. For example, if common concession is decided at 80% for all countries, then we cannot offer China tariff elimination of less than 74%,” a government official said, requesting anonymity.
The common concession of tariff lines is the minimum tariff elimination that a country has to offer under RCEP, which is yet to be finalized. India plans to take a longer period to eliminate tariff with China, say up to 30 years, to give the worried domestic industry enough time to adjust to a trade deal with China.
Steel industry is particularly worried as China has been dumping iron and steel products in India at a much lower price than the domestic industry can supply at. India has often resorted to anti-dumping measures to protect domestic industry from the onslaught of cheap imports from China.
“Other countries want a shorter phasing out period of tariffs; we want a longer phasing out period. Others say what you give to one country, you have to give to everybody, which we don’t agree to,” the official said, pointing at the current level of discussions at RCEP among member countries.
At the Laos Ministerial in August, India had agreed to forgo its own proposal of a three-tier system of tariff concessions to member states under RCEP trade agreement, under which it had proposed to offer 42.5% elimination of tariff lines to China. However, since then, India had sought to play hardball insisting to make services agreement more ambitious where it has an upper hand considering the 12 million skilled youth entering its domestic job market every year.
However, officials are still not clear regarding the possible deliverables in services negotiations, as other members remain inflexible and unwilling to cede ground. “We have to negotiate really hard on services,” the official said.
India has also agreed to give the highest level of tariff elimination to the Association of Southeast Asian Nations (Asean) grouping. In a bilateral meeting during the just-concluded negotiations in Indonesia, India made the assurance to the Asean grouping. The next round of talks is scheduled to be held in Kobe, Japan in February next year.
After the US president elect Donald Trump announced that he will dump the Trans-Pacific Partnership (TPP) agreement championed by present President Barack Obama on the first day in office, focus has shifted to negotiations in RCEP.
Started in May 2013, RCEP comprises the 10 economies of the Asean region (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam) and six of its free trade partners (Australia, China, India, Japan, New Zealand and South Korea).
The grouping envisages regional economic integration, leading to the creation of the largest regional trading bloc in the world, accounting for nearly 45% of the world’s population and with a combined gross domestic product of $21.3 trillion.
The regional economic pact aims to cover trade in goods and services, investment, economic and technical cooperation, competition and intellectual property.