The crucial RCEP Leaders’ Summit is all set to take an important political call on the RCEP negotiations on Monday 4th November at Bangkok. Prime Minister Shri Narendra Modi is scheduled to attend this meeting and put forward India’s concerns with regards to ongoing RCEP negotiations. Never in the past has any trade agreement attracted so much attention from such a wide spectrum of stakeholders in India.
“Prime Minister Shri Narendra Modi has rightly said that India wants win-win outcome from RCEP negotiations. He also reiterated India’s consistent demand of according equal importance to all three major subjects of negotiations – goods, services and investment. CII supports the stance articulated by the Hon’ble Prime Minister” said Mr Vikram Kirloskar, President, CII, commenting on the important trade deal.
“A large section of Indian Industry has expressed serious concerns about joining RCEP on the basis of very genuine reasons, especially pertaining to China and CII is thankful to the Government for taking these on board while negotiating the trade agreement. However, any decision of joining an agreement of this size and magnitude must not be based on our concerns with regards to just one country. FTAs must be considered from their long term impact, both on our domestic market and the access it provides. Some of our industry may be domestically focused today, but in ten years would want access to this most vibrant region of 15 other countries that RCEP provides”, said the CII President.
The 16-member RCEP has the potential to become one of the largest (and economically dynamic) trading blocks of the world, even bigger than the European Union. In 2017, RCEP countries contained 47.6 percent of global population, contributed 31.6 percent of global GDP and 30.8 percent of global trade.
India has had mixed experience of deriving benefits from its past FTAs, as compared to the way some other countries like South Korea, Chile, Mexico and now Vietnam have utilised these for their economic benefit. The missing link in the entire debate on FTAs in India is the importance of FDI. Unfortunately, in India we have always done the impact analysis of FTAs in terms of export and import and that too bilaterally but never realised how these countries used FTAs to successfully get integrated into the global value chains, CII went on to say.
India’s integration into the value chain continues to be low. There are various factors for this. One of them is that its preferential agreements are not deep enough vis-à-vis other agreements of its FTA partners. The future momentum for regional integration in Asia-Pacific will draw considerable strength from the conclusion of negotiations for RCEP and the growth of regional value chains facilitated by RCEP through cross-border flows of trade, investment and people.
“The general perception is that the importance of India is more as a consumer of final product markets. But as RCEP progresses and favourable tariffs and Rules of Origin (ROOs) kick-in, India should become a major hub for coordinating regional value chains through itself – both as a major market for final products and as a location for third-country exports, primarily to the Middle East, Africa and Europe”, Mr Kirloskar said.
2 November 2019