RCEP member nations (Regional Comprehensive Economic Partnership) have deferred concluding negotiations of the proposed free trade agreement to the new year. The main reason behind this postponement of RCEP is that key member states, including India, are headed for elections.
The member countries had been looking forward to resolving sensitive issues such as lowering tariffs but failed to reach an agreement. But as of now, it is unclear whether a deal would be reached.
On the Indian front, the deferral in reaching to any conclusion is a relief to the Modi-government. If the government had agreed to any tariff concessions that RCEP entry requires, it would have definitely ended up facing an electoral backlash. According to The Wire, “the Centre is struggling to build domestic consensus over joining the 16-member Asian free trade agreement, with key industries and ministries like steel and textiles, vehemently opposing India’s entry.” India’s Commerce Minister Suresh Prabhu said the future lies in RCEP and every country will achieve from it.
Meanwhile, sources say that the Centre can choose to prolong negotiations on tariff concessions beyond the coming elections. According to Live Mint a statement from an Indian official said “both in Standard of Technical Regulations And Conformity Assessment Procedures (STRACAP) and Sanitary and Phytosanitary (SPS) negotiations, India managed to obtain balanced outcomes in the application of the Dispute Settlement Mechanism. Indian showed flexibility on the principle of ‘consensus’ in the Institutional Provisions Chapter which helped in its successful conclusion during the meeting.”
China’s presence cannot be disregarded as it has a $60 billion trade deficit with. Besides, the Indian industry apprehends greater market access to China could harm key manufacturing sectors like steel and textiles. And India is apprehensive about giving greater market access to non-FTA partners – Australia and New Zealand.
What Has RCEP Achieved
The member countries have completed negotiations for seven chapters:
- Economic and Technical Cooperation
- Small and Medium Enterprises
- Customs Procedures and Trade Facilitation
- Government Procurement
- Institutional Provisions
A joint RCEP statement said talks on goods and services market access and investment reservation lists have advanced significantly with the RCEP participating countries. They had engaged in a series of bilateral and plurilateral negotiations throughout the year.