RCEP tariff

RCEP: Still a Work in Progress

RCEP:  Still a Work in Progress

This was supposed to be the year that the Regional Comprehensive Economic Partnership (RCEP) trade negotiations finally wrapped up.  Once again, it will not happen. The 16 parties involved (Australia, Brunei, Cambodia, China, India, Indonesia, Japan, Laos, Malaysia, Myanmar, New Zealand, Philippines, Singapore, South Korea, Thailand, and Vietnam) have been talking since early 2013.  After 24 formal rounds, at least 9 ministerials, multiple informal meetings, and annual leader’s meetings, RCEP remains a work in progress. Why is it taking so long to get an agreement? The short answer is two-fold—a lack of sufficient political will and serious technical challenges in bridging the gaps between widely different member states.  The lack of political will seems surprising to many outsiders.  After all, at a time of rising global trade tensions, surely this is the best time to lock down an agreement in Asia to keep trade lanes open for mostly export-dependent trading states? 

India’s Agriculture and RCEP

This was the case with AIFTA, in which despite the elimination of tariffs for about four thousand products, sensitive and high growth industries were included under the Sensitive—tariffs to be reduced to 5%--and Exclusion—no elimination of tariffs—lists; both of which largely cover agricultural products. More specifically, at the time of implementation the number of products under the Exclusion/Sensitive lists was higher than the number of tariff lines for ASEAN and world imports into India. These duty concessions signalled an implicit protection against the future engagement or the expansion of agricultural imports.  In other words, India essentially put nearly all agricultural items that might have been imported from ASEAN countries into categories that did not receive tariff reductions.  Hence, whatever increased import competition Indian agricultural producers have faced from ASEAN competitors in the wake of AIFTA cannot have been the result of duty reductions produced by the FTA itself.