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RCEP pull-out: India may join back if demands met, says Piyush Goyal

FE Bureau
RCEP, India, Piyush Goyal, RCEP talks, Modi government, india trade, RCEP partners, imported products

A day after India decided to pull out of the 16-nation Regional Comprehensive Economic Partnership (RCEP) talks, commerce and industry minister Piyush Goyal indicated that New Delhi may get back at the negotiating table only if its demands - including extra safeguard mechanism to curb irrational spike in imports and tougher rules on the origin of imported products and - were adequately addressed. However, for now, the country had decided against joining the RCEP, he asserted.

Goyal slammed the Congress-led UPA government for having signed scores of free trade agreements (FTAs) with Asean, South Korea, Malaysia and Japan, which only exacerbated India's trade imbalance vis-a-vis these trading partners and put the interests of domestic industry in jeopardy. The Modi government had now initiated the process of renegotiating these pacts, especially with Asean, he said.

"When the Asean FTA was signed, India scrapped import tariffs on 74% of products but some others didn't commit that much - such as Indonesia (whose per capita income was higher than ours) removed tariffs on only 50% items and Vietnam just 69%. What was the compulsion for the Congress party to ink such FTAs?" Goyal asked.

Similarly, between 2004 and 2014 when the UPA was in power, India's merchandise trade deficit with RCEP partners zoomed over 11 times from just $7 billion to $78 billion. Goyal also sought to highlight the irony of the Congress leaders now opposing the RCEP agreement, saying it was the UPA that had decided to get into this mega trade deal.

In fact, the Manmohan Singh government wanted to hammer out a trade pact with even China. The minister's statement came after senior Congress leader Rahul Gandhi took a jibe at the government on RCEP, saying "Make in India" has become "Buy From China". Even Sonia Gandhi had recently said an RCEP deal would deal a body blow to the Indian economy.

A joint statement of RCEP nations after Monday's summit, where Prime Minister Narendra Modi attended, was silent on India's decision to pull out. It merely said: "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."

This was a clear indication that others were keeping the doors open for India to join back, should it so decide. Goyal said India was unwilling to budge on its demand on an "auto-trigger" mechanism for safeguarding domestic industry from dumping, despite pressure from partners. Also, it was steadfast in demanding credible steps to address India’s $105-billion trade deficit with RCEP members, a more balanced deal on services, strict rules of origins of products to check the abuse of tariff concessions and change in the base year to implement the tariff abolition from 2014 to 2019. Moreover, it almost wanted its agricuture and dairy sector out of the RCEP negotiations.

Most members wanted to conclude the negotiations in 2019 so that a deal can be formally signed in 2020.
Announcing the decision to not join the RCEP on Monday, Modi had said in Bangkok: "When I measure the RCEP agreement with respect to interests of all Indians, I do not get a positive answer. Therefore, neither the Talisman of Gandhiji nor my own conscience permits me to join RCEP."