RCEP and India

APO Group 7
Farzeen Khan- 150103075
Vijeta Gaur- 150103202
Akshun Sachdev- 150103025
Vyom Mathur- 150103205
Dheeraj
Achintya Goel- 150101006

What is RCEP
Regional
Comprehensive
Economic
Partnership (RCEP) is a proposed free trade
agreement (FTA) between
The 10 members of ASEAN
Additional members of ASEAN +3 =
China, Japan, South Korea
Members with which ASEAN countries
have FTA i.e. India, Australia, New Zealand
Aims to cover trade in goods and services,
investment, economic and technical
cooperation, competition and intellectual
property
Projections by the Asian Development Bank
indicate that the RCEP provides global
income benefits of about $260 billion

Source: http://asia.nikkei.com/magazine/20160616-POWER-PERFORMERS

Difference between RCEP & TPP

TPP aims to be a high quality preferential trade
agreement with few exemptions and extensive
regulatory alignment is in areas such as labor law,
environmental protection and intellectual property
rights
RCEP sets the bar low and accepts that less
developed countries will reduce trade barriers at
different rates and also makes limited demands for
regulatory harmonization
Both can be understood in the context of a
growing number of Chinese-led initiatives that, in
their entirety, create a "parallel order" to
complement and possibly some day rival existing
US-led structures
Prevailing deal will allow either Washington or
Beijing to act as a regional agenda-setter, shaping
the architecture of economic cooperation in the
Southeast and East Asian regions
Source: http://www.postwesternworld.com/2015/08/21/tussle-

Negotiation so Far
Round 4: April 2014
in China
Deliberation on trade in
services. new working
groups on Intellectual
Property, Competition,
and Economic and
Technical Cooperation

Round 1: May 2013

in Brunei

Round 7: February
2015 in Bangkok

Launch of Negotiations
for the RCEP. Guiding
Principles and
Objectives for
Negotiating the RCEP
endorsed by RCEP

Asian Trade Centre

(based in Singapore)
submitted a proposal
regarding an eCommerce chapter

Round 14
August 2016 in
Vietnam
India ready to
move towards
single tariff
approach with
few exceptions

Round 13: June

2016 in New
Zealand
India proposed
three-tier
approach to tariff
reduction

Roadblocks in RCEP

Huge economic disparities

among the negotiating
countries

Too many different Rules

Of Origins and their lack of
commonality across FTAs

Inevitable source of trust

deficit between China and
the rest due to Chinas
aggressive postures on
territorial disputes and
South China Sea dispute

Flexibility clause could

limit change or curtail
progress in achieving
greater liberalization

Source: http://www.eu-asiacentre.eu/pub_details.php?

Current Trade scenario in India

Indias recent experience of FTAs with
Japan, South Korea and ASEAN
countries has not been very positive
as bilateral trade volumes have
increased but imports from partner
countries have increased at a faster
pace than Indias exports with
partners

Source: http://www.acteast.indiaincorporated.com/japan-from-an-outsider-to-

Challenges to India
Study by Commerce Ministry indicates that it can lead to a revenue loss of 1.6%
of the GDP
India was unable to secure greater market access in its trade pact with ASEAN
Tariff barriers will be central to the negotiations in the upcoming rounds of RCEP
negotiations
Non-trade issues such as environment and labor need greater attention
Need to take steps to strengthen MSME sector so that it can survive the free flow
of trade, but also to become a set of more competitive players. Higher
investments in R&D and achieving international standards in terms of delivery
are needed
Negotiating terms with China. India has to be firm and calculative in terms of
taking tough policy decisions, while working tirelessly on capacity building of its
domestic industries
Competition with Indonesia and Philippines can reduce the benefits of service
trade within the bloc
Source: http://idsa.in/system/files/artic.pdf

Benefits to India
The agreement would complement Indias existing free trade agreements with
the ASEAN and some of its member countries, as it would deals with Japan and
South Korea
More consistent ways for dealing with sanitary and phytosanitary measures,
technical barriers to trade, customs procedures, and rules of origin
Help achieve its goal of greater economic integration with countries East and
South East of India through better access to a vast regional market ranging from
Japan to Australia
India enjoys a comparative advantage in areas such as information and
communication technology, IT-enabled services, professional services,
healthcare, and education services and hence insisting on a single deal which
includes goods, services as well as investments
In addition to facilitating FDI, the RCEP will create opportunities for Indian
companies to access new markets
Major opportunity for small and large Indian businesses but would need to gear
up for RCEP by investing in price, quality, and delivery of international standards

Source: http://thediplomat.com/2015/03/why-rcep-is-vital

Indias stance in Negotiation

India had earlier proposed three-tier tariff deal for RCEP countries
Zero duty on over 80% of its tariff lines in the case of the
ASEAN countries

65% to South Korea and Japan with whom it has FTAs

42.5% tariff liberalization to China, Australia and New Zealand

with which it does not have free-trade agreements

It had later withdrawn the zero duty offer due to troubling disconnect between
the Make in India program and an increasingly liberalized, post-FTA import
regime
The three tier deal proposed by India was opposed by all ASEAN countries
who wants India to open up all tariff product lines to duty cuts except for a
select number of items
Source: http://www.thehindubusinessline.com/opinion/editorial/making-rcep-

Indias stance in Negotiation

In August 2016, India agreed to provide similar
tariff cuts to all RCEP member states with limited
deviation
Because of the trade deficit with China, India
would provide China a lower tariff cut than the
other countries but higher than the initially
offered 42.5%
It also plans to stagger the phase-out of tariffs
over a longer period in the case of China, to allow
Indian industry more time to adjust
In the next meeting, India is expected to take a
strict stance on service negotiation for which
ASEAN countries are reluctant
Goods negotiation would depend on other
members progress on services negotiation

Source: http://www.livemint.com/Politics/mOzWKi4gvcNzK7KkBTqJWI/India-to-talk-tough-at-RCE

Major Impact on Indian Business

Tariff reduction in a much higher number of commodities to China with whom
it has a staggering $52.7 billion trade deficit with only $9 billion of exports in
2015-16
Indian steel, aluminum and chemicals industry may be impacted as China
gets larger access to Indian market due to RCEP
Indias major interest area is on service front. It has been insisting on easier
visa regimes for its burgeoning skilled professionals
Little to gain in getting market access in goods in other countries due to its
poor infrastructure and weak manufacturing base
Reduction of non-tariff barriers in RCEP could benefit from the experience of
a key interest for India, namely pharmaceuticals

Source: http://www.asiapathways-adbi.org/2013/07/why-indian-business-should-

Way forward
Support Indian firms by investing in implementing second-generation
structural reforms, providing access to industrial finance and investing
in transport and energy infrastructure, tertiary-level technical
education and science and technology institutions
Protection of few sensitive sector like farming and mining
Rather than having too many exemptions India should gradual open
the market giving Indian business time to prepare
Push for services liberalization and the movement of Indian
professionals between RCEP countries. Major countries are reluctant to
open their labor market
Source: http://www.eastasiaforum.org/2014/07/07/india-looks-east-to-rcep-for-

THANK YOU