Regional Comprehensive Economic Partnership

1. Regional Comprehensive Economic Partnership

2. Regional Comprehensive Economic
Partnership
Dr. Shobha Menon
SCMS School of Technology and Management
Cochin, Kerala
India
15 Sept. 2018
15 September 2018
Dr. Shobha Menon, SCMS School of Technology and
Management
2

3. Countries involved
• ASEAN – 10 members
• India
• China
• Japan
• South Korea
• Australia
• New Zealand

4. Impact of RCEP
• Largest free trade bloc in the world
• Covers 3.5 billion people (45% of the world population)
• 30 % of the world’s GDP ($21 trillion of GDP)

5. Market access in goods key centrepiece

6. Being Proposed
• 92 % of tariff lines – 0%
• Additional 7% - less than 5%
• No concessions on services from ASEAN

7. Key challenges for India
• To extract meaningful concessions for enhancing market access in
RCPs ( RCEP participating countries), which should come largely
from services
• To do a trade deal which will provide the necessary instruments that
will ensure the economic viability of small farmers and industries, in
the face of relentless import competition
• Need a flexible tariff regime to allow tariffs to be calibrated (within
the WTO tariff regime).

8. India’s stand
• Wants a balance between goods, services and investments. RCEP is
not a goods partnership alone but an economic partnership that
includes services
• No substantial offers in Mode 4 ( Part of FTA between ASEAN, New
Zealand, Australia) related to movement of workers and
professionals on the part of ASEAN countries and others

9. Impact on our economy
• Large number of small manufacturing industries as well as agricultural
commodity producers not able to measure up to import competition.
• In 2017-18,India’s trade deficit with the RCPs was $ 104 billion (Total
trade deficit - $ 162 billion) up from $ 48 billion at the end of previous
decade.
• Example - Milk and milk products
Inflow of cheaper raw materials from New Zealand and Australia for
reconstituted milk affects the market for natural milk
Average productivity for milk 4.90 kgs/day which is lower compared to
developed countries

10. Areas of dispute
• Items to be selected for tariff elimination
• Items to be selected for tariff reduction
• Items to be selected for no tariff elimination
• Staging of the tariff cuts – linear/non linear

11. Current status
• Members have agreed to binding commitments in the area of easing
movement of workers and professionals.
• India has agreed to reduce or eliminate tariffs on a larger number of
goods than it had earlier proposed subject to being given the
flexibility to get around its sensitivities (less onerous commitments
to be implemented over a longer period) with countries that it does
not have bilateral free trade pacts , including China, Australia and
New Zealand.
• Talks will continue in 2019 though the countries have agreed to
reach a package of deliverables by end of 2018.

12. References
• https://www.thehindubusinessline.com/opinion/columns/rcep-deal-can-be-
disastrous-for-india/article24936537.ece
• https://economictimes.indiatimes.com/news/economy/foreign-trade/rcep-
negotiations-not-to-end-in-2018-suresh-prabhu/articleshow/65672033.cms
• https://www.thehindubusinessline.com/opinion/editorial/india-should-
carefully-weigh-the-pros-and-cons-of-exiting-the-trade-
bloc/article24731657.ece