“Concluding RCEP Negotiations is an Imperative for ASEAN, but China’s and India’s Cooperation is Vital”, a Commentary by Sanchita Basu Das

Commentary 2016/24, 21 June 2016

The thirteenth round of negotiation for Regional Comprehensive Economic Partnership (RCEP) was held in Auckland, New Zealand, from June 12 to 18. Negotiations have been underway for more than three years. Now more than ever, the ASEAN states and the other six parties need to conclude the negotiations.

The 12-party agreement of Trans-Pacific Partnership (TPP) had already been signed in February 2016. The agreement, led by the US, categorically mentions that it intends to write the 21st century global trade rules. RCEP, instead, is led by ASEAN and takes an accommodative approach to the needs of developing countries. RCEP includes China and India, the two big economies leading the global growth story of late, but have been left out of TPP. Both RCEP and TPP can shape the trade architecture in the Asia-Pacific. But in absence of RCEP, there are high chances that TPP will define the trade rules in the future.

Concluding RCEP negotiation will enhance ASEAN’s Centrality and provide some alternative to the TPP. China would also see to its interest to seal a RCEP deal especially when TPP hangs in the balance in the US because of domestic politics.

Negotiations on RCEP currently includes liberalisation of trade in goods, services, investment; intellectual property right laws; rules of origin; customs procedure; trade facilitation; electronic commerce; technical barriers; sanitary and psyto-sanitary standards; finance; telecommunication and few others. Although not much information is available on public domain on the progress, it has been reported that the RCEP countries have agreed to reduce tariff on 65 per cent of trade in goods (about 8000-9000 goods items) to zero immediately when RCEP comes into play. While tariff on 20 per cent of trade in goods will be reduced to zero within 10 years after RCEP’s date of implementation, tariff on the remaining 15 per cent of the goods, considered to be sensitive, will be negotiated in the future. For services and investment, initial offer list and initial reservation list respectively have been submitted.

India has been repeatedly mentioned as a key bottleneck in the negotiations as the country has significant apprehension for tariff reduction for goods from China. Its main interests lie in services, removal of technical barriers to trade and trade in goods, such as pharmaceuticals and textiles. India has been pushing hard to liberalise the free movement of professionals in order to offset the revenue loss from goods liberalisation.

Sanchita Basu Das is Fellow at ISEAS – Yusof Ishak Institute

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