NEW DELHI: India is caught in a bind over a new trade grouping — Regional Comprehensive Economic Partnership (RCEP) — that Asean is trying to create with countries that have bilateral agreements with the trading bloc. Although New Delhi is keen to join the group, the proposed alliance will have China as one of the members, which has raised the worry levels in the government over the possibility of cheap imports flooding the domestic market.
For several years, India has resisted efforts to sign a free trade agreement with its neighbour as it fea
s that the trade deficit will widen further. The government is worried over the rising gap, which touched a record $39 billion in 2011-12 and accounted for over a fifth of the country's trade deficit of $183 billion. In fact, the commerce department had started work on a strategy to lower the burden by checking imports and pushing exports. But RCEP could force it to alter this as it will result in the 11 Asean members, along with India, China, South Korea, Japan, Australia and New Zealand agree to lower import duties on a majority of the goods.
Officials within the government are also worried as RCEP may require India to increase its commitment on intellectual property rights, a move that could hurt access to medicine and the local drug manufacturers, who have come to acquire a reputation of specializing in developing low-cost generics of patented medicines.
At the same time the proposed alliance is seen to give the partners greater leverage in dealing with trade arrangements such as the Trans-Pacific Partnership that has the US, Canada, Mexico and some Asean members such as Malaysia and Singapore. Officials also said entry to the club at a later date may result in India having to undertake more commitments on duty reduction. "It is going to be like WTO. You can enter late but after paying a price," said an official.
With the so-called guiding principles and objectives for negotiating the RCEP to be discussed by the leaders at the East Asia Summit next month, the commerce department is keen that the strategy is clearly articulated. In fact, it will top the agenda for the meeting of the Trade & Economic Relations Committee headed by PM Manmohan Singh on Friday.
RCEP was endorsed earlier at the 19th Asean Summit last year and is seen as an upgraded version of the East Asia Free Trade Agreement and the Comprehensive Economic Partnership in East Asia that were discussed earlier. It has an open architecture that allows any Asean partner to join later.
Source : Times of India
