WILL INDIA CONTINUE WITH OR Withdraw FROM RCEP - TOUGH DECISION FOR INDIA
BACKGROUND
Regional Comprehensive Economic Partnership (RCEP) is a proposed Free Trade Agreement (FTA) between the 10 member states of the ASEAN countries and six Asia-Pacific States.
RCEP negotiations were formally launched in 2012 at the ASEAN summit in Cambodia.
The first RCEP summit was held on 14 November 2017 in Manila, Philippines. RCEP is viewed as an alternative to the Trans-Pacific Partnership (TPP), a proposed trade agreement which includes several Asian and American nations but excludes China and India.
Currently RCEP - Not in Force
The free trade agreement is scheduled and expected to be signed in November 2018 during the ASEAN Summit and Related Summit in Singapore.
India is under pressure from the other members to commit to eliminate duties on atleast 90% of the goods that it trades with them and concludes the RCEP this year.
India has a huge trade deficit with China alone. During the last ten years, it has increased from around $7.8 billion in 2006 to $52 billion in 2015 i.e 54% of total deficit with RCEP.
In General manner we always think Free Trade /Open trade is good, Companies will come and people get jobs.
But Sometimes It could be bad for some Countries Like INDIA
As we know currently India has put some barriers for CHINA i.e. in many sectors CHINA can't trade in INDIA OR if trade then Tariffs are very high. And we know currently CHINA is on Peak in terms of capital and skills and if now we remove trade tariffs by signing RCEP - Chinese companies will get more access to India Market.This is main concern for India.
TOUGH CALL for INDIA - Whether to Continue with or Withdraw
The government has set up a four-member group of ministers (GoM) headed by trade minister Suresh Prabhu to advise prime minister Narendra Modi on whether to continue with or withdraw from the 16-member Regional Comprehensive Economic Partnership (RCEP) negotiations.
Finance Minister - Piyush Goyal ,
Defence Minister - Nirmala Sitharaman
Housing and Urban affair minister - Hardeep Singh Puri
These four ministers will consider whether India Should continue with or withdraw from the 16-member Regional Comprehensive Economic Partnership (RCEP) negotiations.
The GoM will find a way forward from the current deadlock.
INDIA'S CONCERN
India, instead, has offered to eliminate tariffs on 80% of products with a margin of 6% depending on level of development of the other country as part of the Regional Comprehensive Economic Partnership (RCEP). With this math, India may have to eliminate duties on 74% of its traded goods with China over the long run.
TRADE DEFICIT
We have many free trade agreement but that are one to one - But There is no trade agreement earlier with any large group.
Another PROBLEM
India has dragged its feet as the pact doesn’t provide for free movement of skilled workers, a key concern for New Delhi given its large pool of tech workers, even as it opens its market to a clutch of nations known for their manufacturing prowess.
As earlier our skilled worked go to US etc for work and earn money and sent back to India but Now Gates are now closed - But we want that our skilled workers should freely move so that they earn - but other 15 nations does not mention anything about this.- So this is Key Concern. Hence, in Long Run this deal could not be beneficial for India.
WHAT EXPERTS HAVE SAID ON THIS
Former Chief economic adviser in the finance ministry, Arvind Subramanian, too, had said that India needs to be extra cautious and take into account geostrategic issues while moving ahead with the RCEP deal, as it would mean opening up the market to its adversary China.
Former foreign secretary S. Jaishankar, at a presentation before the parliamentary standing committee on commerce, had called for “observance of due restraint” and warned against concluding trade arrangements that are not in India’s medium-term interest.
India joining RCEP trade pact could be disastrous: NITI Aayog
For more information, you can access below links :
https://www.thehindubusinessline.com/economy/india-faces-a-stern-test-of-its-commitment-to-rcep/article24636002.ece
http://www.globaltimes.cn/content/1114300.shtml
https://www.livemint.com/Politics/ANFnvJ4a1MHXgqISlnNQ2N/India-joining-RCEP-trade-pact-could-be-disastrous-NITI-Aayo.html
Above Information is as per as per data available in news till the date when I am posting this.
For Other Topics visit - http://learn2ogether.blogspot.com/
Regional Comprehensive Economic Partnership (RCEP) is a proposed Free Trade Agreement (FTA) between the 10 member states of the ASEAN countries and six Asia-Pacific States.
RCEP negotiations were formally launched in 2012 at the ASEAN summit in Cambodia.
The first RCEP summit was held on 14 November 2017 in Manila, Philippines. RCEP is viewed as an alternative to the Trans-Pacific Partnership (TPP), a proposed trade agreement which includes several Asian and American nations but excludes China and India.
Currently RCEP - Not in Force
The free trade agreement is scheduled and expected to be signed in November 2018 during the ASEAN Summit and Related Summit in Singapore.
India is under pressure from the other members to commit to eliminate duties on atleast 90% of the goods that it trades with them and concludes the RCEP this year.
India has a huge trade deficit with China alone. During the last ten years, it has increased from around $7.8 billion in 2006 to $52 billion in 2015 i.e 54% of total deficit with RCEP.
Commerce
and industry minister Suresh Prabhu, finance minister Piyush Goyal,
defence minister Nirmala Sitharaman and housing & urban affairs
minister Hardeep Singh Puri will consider whether India should continue
with or withdraw from the Regional Comprehensive Economic Partnership
(RCEP) trade agreement negotiations.
Trade Deficit - The amount by which the cost of a country's imports exceeds the value of its exports.In General manner we always think Free Trade /Open trade is good, Companies will come and people get jobs.
But Sometimes It could be bad for some Countries Like INDIA
As we know currently India has put some barriers for CHINA i.e. in many sectors CHINA can't trade in INDIA OR if trade then Tariffs are very high. And we know currently CHINA is on Peak in terms of capital and skills and if now we remove trade tariffs by signing RCEP - Chinese companies will get more access to India Market.This is main concern for India.
TOUGH CALL for INDIA - Whether to Continue with or Withdraw
The government has set up a four-member group of ministers (GoM) headed by trade minister Suresh Prabhu to advise prime minister Narendra Modi on whether to continue with or withdraw from the 16-member Regional Comprehensive Economic Partnership (RCEP) negotiations.
ndia
is under pressure from the other members to commit to eliminate duties
on at least 90% of the goods that it trades with them and conclude the
RCEP this year
ndia
is under pressure from the other members to commit to eliminate duties
on at least 90% of the goods that it trades with them and conclude the
RCEP this year
Commerce and Industry Minister 'Suresh Prabhu'Finance Minister - Piyush Goyal ,
Defence Minister - Nirmala Sitharaman
Housing and Urban affair minister - Hardeep Singh Puri
These four ministers will consider whether India Should continue with or withdraw from the 16-member Regional Comprehensive Economic Partnership (RCEP) negotiations.
The GoM will find a way forward from the current deadlock.
INDIA'S CONCERN
- ASEAN’s aggressive push to dismantle tariffs on about 90-92 per cent items and reduce tariffs to below 5 per cent on an additional 7 per cent of items is worrying for India.
- It would expose sensitive items, including farm and dairy goods, automobiles and steel products, to tariff cuts. ( So Other Companies like Australian, Cambodian companies may damage our companies)
- For investment too, there are contentious areas such as liberalizing
based on a negative list (wherein all items are to be included except
those specifically mentioned in a list) and the inclusion of an Investor
State Dispute Settlement mechanism. ( Let's suppose RCEP get sign and will remove tariff - But let's see if any investor think our India policy is against them - they can put legal case on India by going on investor State Dispute Settlement and in case if they won case and we need to give billion of dollars to those private company)
- This could lead to India getting involved in costly legal suits filed against it by corporates.
India, instead, has offered to eliminate tariffs on 80% of products with a margin of 6% depending on level of development of the other country as part of the Regional Comprehensive Economic Partnership (RCEP). With this math, India may have to eliminate duties on 74% of its traded goods with China over the long run.
TRADE DEFICIT
- There is concern across ministries that joining the accord could severely dent local manufacturing and jobs.
- China’s $60-billion trade surplus with India will swell even further as it floods the market with cheap goods at zero tariffs. So Trade Deficit could increase
- India has a trade deficit with as many as 10 RCEP countries, including China, South Korea and Australia, among others.
- In comparison with the TPP (Trans-Pacific Partnership) & TTIP (Transatlantic Trade and Investment Partnership) groups of countries, India’s trade with the RCEP group of countries as a percentage of its total trade has increased over the past decade. This shows the importance of RCEP to India.
We have many free trade agreement but that are one to one - But There is no trade agreement earlier with any large group.
Another PROBLEM
India has dragged its feet as the pact doesn’t provide for free movement of skilled workers, a key concern for New Delhi given its large pool of tech workers, even as it opens its market to a clutch of nations known for their manufacturing prowess.
As earlier our skilled worked go to US etc for work and earn money and sent back to India but Now Gates are now closed - But we want that our skilled workers should freely move so that they earn - but other 15 nations does not mention anything about this.- So this is Key Concern. Hence, in Long Run this deal could not be beneficial for India.
WHAT EXPERTS HAVE SAID ON THIS
Former Chief economic adviser in the finance ministry, Arvind Subramanian, too, had said that India needs to be extra cautious and take into account geostrategic issues while moving ahead with the RCEP deal, as it would mean opening up the market to its adversary China.
Former foreign secretary S. Jaishankar, at a presentation before the parliamentary standing committee on commerce, had called for “observance of due restraint” and warned against concluding trade arrangements that are not in India’s medium-term interest.
India joining RCEP trade pact could be disastrous: NITI Aayog
For more information, you can access below links :
https://www.thehindubusinessline.com/economy/india-faces-a-stern-test-of-its-commitment-to-rcep/article24636002.ece
http://www.globaltimes.cn/content/1114300.shtml
https://www.livemint.com/Politics/ANFnvJ4a1MHXgqISlnNQ2N/India-joining-RCEP-trade-pact-could-be-disastrous-NITI-Aayo.html
Above Information is as per as per data available in news till the date when I am posting this.
For Other Topics visit - http://learn2ogether.blogspot.com/
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