Negotiators representing 16 countries have been tasked with arriving at an agreement on the controversial Regional Comprehensive Economic Partnership by October 19 but trade unions say the deal has grave consequences
Trade negotiators representing 16 countries set to sign the controversial Regional Comprehensive Economic Partnership (RCEP) have been tasked with arriving at an agreement on the clauses by October 19.
This is despite concerted opposition to a number of key clauses from trade unions, people’s movements and activists in these countries. In India, for instance, 10 central trade unions released a memorandum, urging the government to withdraw from the negotiations.
Should the disagreements between the governments be resolved on schedule, the heads of these states are expected to sign the Free Trade Agreement (FTA) on November 4 at the 3rd Leaders’ Summit in Bangkok. With the 10 ASEAN countries, along with India, China, Japan, South Korea, Australia and New Zealand, becoming parties to the RCEP, this agreement, once effective, will bring about a third of the world’s economy and 45% of its population under its purview.
At the 9th Intersessional Ministerial Meeting held on October 11 and 12, trade ministers of these countries could not arrive at a consensus, mainly due to objections raised by India to chapters pertaining to the regulation of trade, investment and data flow across borders.
Most of the other governments, which already have bilateral FTAs between each other, have been able to arrive on a common understanding, despite widespread domestic opposition from farmers’ groups, trade unions and civil society.
But an agreement with Indian negotiators has so far not been arrived at because the country does not have an existing FTA with three RCEP countries – Australia, New Zealand and, most importantly, China, which is the biggest economy in the region.
For an initial period of 8-10 years, India is seeking to apply a safety mechanism on imports from these countries, which will trigger automatically if the imports of 68 specific commodities, identified as sensitive, cross a stipulated threshold.
In theory, this mechanism should ensure that once the imports of these items cross an annual limit – specified either in terms of volume or in terms of price – import duties can begin to apply on them, or quantitative restrictions can be set, which will result in items above the threshold being sent back.
India is seeking to apply this mechanism mainly to Chinese exports, 80% of which is expected to find a duty-free entry into the country after the RCEP is concluded. Of the $105 billion trade deficit India already has with RCEP countries – which is roughly 60% of the country’s total trade deficit – $53 billion is with China. This is despite the fact that currently, in the absence of an FTA, only around 15-20% of its goods can be imported into the country without tariffs.