Relief likely for India as RECP may vote for “no early harvest” policy

The next ministerial of the 16-nation Regional Comprehensive Economic Partnership (RCEP) in the Philippines on 4 November is expected to adopt the ''no early harvest'' policy, following India's insistence on a comprehensive package, sources said on Tuesday.

This would mean that the agreements on all the three pillars of negotiations - goods, services and investment - will have to be implemented at one go, as a package.

Accordingly, any agreement on any of the three pillars cannot be implemented unless accompanied by the other two pillars as well.

India has been insisting that any adoption of an agreement on trade in goods cannot be adopted without simultaneously adopting agreements on services and investments and any agreement on trade in goods without simultaneous agreement on services trade and investment will only harm India's interests.

For smaller countries in the RECP, what is most urgent is an early agreement on goods trade. But under ''no early harvest'' policy, any agreement on goods trade cannot be enforced without similar agreements on services trade and investment.

India, meanwhile is preparing separate lists for liberalisation of trade in goods, with a not-so-liberalised list for China, which even otherwise is flooding Indian market with cheap goods.

While India is likely to consider scrapping as much as 80 per cent of tariff lines in merchandise trade for all other RCEP partners, it is likely to offer tariff reduction for up to 65 per cent of tariff lines for China, against the 42.5 per cent offer made earlier.

Any further relaxation in tariff for Chinese goods will take a longer period of up to 30 years, considering the potential harm it could bring to Indian industry.

India, which has already accumulated a massive $53-billion deficit in its goods trade with China, will, however, be bold to sweeten its offer in goods trade provided it is assured of commensurate pledges from others in services trade and investment.

The scrapping of tariff lines means import duties on specified items would be cut to zero over a mutually agreed-upon time frame.

India had initially offered to abolish 80 per cent of tariff lines for 10 Asean members, 65 per cent of tariff lines for Japan and South Korea and 42.5 per cent for China, Australia and New Zealand.

In return, while South Korea and Japan were willing to offer 80 per cent tariff elimination for Indian goods, China was ready to remove only 42.5 per cent tariff lines. Australia and New Zealand offered to abolish 80 per cent and 65 per cent, respectively, of tariff lines for merchandise imports from India.