The crucial meeting of the officials of the proposed RCEP is meeting in Vietnam. Meeting of the officials will negotiate on future tariff structure within the RCEP which has 16 members including ASEAN countries, India China, Japan, South Korea, Australia and New Zealand.
The RCEP is an Asian alternative to the US led TPP where China is not a member. From the Indian angle, the proposed FTA discussion is very important as the country is the least prepared for the aggressive tariff cut suggested by others especially China.
Beijing aims a zero tariff structure for bulk of the manufacturing commodities given its advantage in the sector. ASEAN is also not opposed to such a tariff structure because of the considerable level of industrial sector competence within the old trade bloc. Japan and South Korea also would like to promote tariff cutting because of their industrial sector competence.
For India, the experience of its FTA with ASEAN was not good as imports got stimulated and trade deficit widened.
“While India has recently changed tracks emphasizing that it doesn’t want to bring down tariffs to zero, members would want it to reveal the tariff cuts it has in mind and try to push the country to pare them as low as possible.” – Business line has quoted a trade official.
The RCEP aims to expand trade to intellectual property, government procurement, investment etc. besides usual goods and services. Several industry organizations have warned the government about the adverse impact of a zero tariff regime on domestic industries.