The Regional Comprehensive Economic Partnership (RCEP) does not address satisfactorily India's outstanding issues and concerns. In such a situation, it is not possible for India to join RCEP agreement, the Ministry of External Affairs said.

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"The present form of the RCEP agreement does not fully reflect the basic spirit and the agreed guiding principles of RCEP," government sources said, adding, "India stands for greater regional integration as well as for freer trade and adherence to a rule-based international order. India has been pro-actively, constructively and meaningfully engaged in the RCEP negotiations since inception. India has worked for the cherished objective of striking balance, in the spirit of give and take."

RCEP is a proposed free trade agreement between ASEAN — that has 10 member countries – and a group of six other nations — China, Japan, India, Australia, New Zealand, and South Korea. These 16 countries account for almost half the world’s population and a third of its GDP.

Sources further said, "Our farmers, traders, professionals and industries have stakes in such decisions. Equally important are the workers and consumers, who make India a huge market and the third biggest economy in terms of purchasing power parity."

According to government sources, Prime Minister Narendra Modi, at the ministerial negotiations held at the 35th ASEAN Summit in Bangkok to iron out the agreement, said, "When I measure the RCEP agreement with respect to the interests of all Indians, I do not get a positive answer. Therefore, neither the Talisman of Gandhiji nor my own conscience permit me to join RCEP."

RCEP, in a joint statement, said, "We noted 15 RCEP participating countries have concluded text-based negotiations for all 20 chapters and essentially all their market access issues; and tasked legal scrubbing by them to commence for signing in 2020. India has significant outstanding issues, which remain unresolved. All RCEP participating countries will work together to resolve these outstanding issues in a mutually satisfactory way. India’s final decision will depend on satisfactory resolution of these issues."

Indian government wanted safeguards to be built into a China-led RCEP pact to prevent a sudden surge in imports, trade ministry said in October.

Commerce minister Piyush Goyal has been holding talks to allay fears of a flood of Chinese imports if India joined the agreement, the ministry said earlier.

Sources further said, "India will avoid joining Free Trade Agreements (FTAs) with countries with whom there is a huge trade imbalance."

Indian farmers, MSMEs as well as the trading community that is aligned to the ruling BJP party, had raised red flags on the mega duty-free deal due to the presence of China.

According to Reuters, at least 6 of the pending issues relate specifically to India, where the domestic industry is concerned about spike in imports from China due to the free trade pact.

To protect interest of the domestic industry, India has demanded that the base year for tariff cuts under RCEP FTA should be advanced from 2014 to 2019.

India maintains that in the 5 year period, tariffs were increased on several thousand products and hence 2019 should be the year based on which tariff cuts should be carried out under the RCEP FTA.

Another contentious issue raised by India is regarding an automatic trigger mechanism of import duties in case of spike in foreign shipments from RCEP nations. In the RCEP FTA work programme, India, China, Australia and New Zealand have been asked to resolve the issue.

India has also sought a carve out from a provision that syncs its preferential duty rates to the RCEP group. The intention of this provision is that in the future if any RCEP member lowers duties for a non RCEP nation under a trade pact, similar benefits will also have to be automatically offered to the RCEP FTA countries.

In addition, India has sought stringent rules of origin rules — which mandates minimum value addition that needs to be undertaken in a supply chain, before that product is exported from an RCEP country to India.

Last but not least, the work programme also seeks India to make commitments to the best of its ability on e-commerce — a sector where data localisation norms have become an issue for foreign companies.

First Published:Nov 4, 2019 6:26 PM IST