World

Fifteen countries agree terms for world’s biggest trade pact

India delays final decision due to differences over tariffs, trade deficit and other matters

BANGKOK: Fifteen Asian countries agreed terms yesterday for what could be the world's biggest trade pact, but India delayed its decision on joining because of significant differences over tariffs and other issues.

The Regional Comprehensive Economic Partnership (RCEP) is backed by China and also brings in the 10-member Association of South-east Asian Nations (Asean), Japan, South Korea, Australia and New Zealand.

Participating countries met in Bangkok alongside a meeting of South-east Asian leaders.

"We noted 15 RCEP participating countries have concluded text-based negotiations for all 20 chapters and essentially all their market access issues," the statement from the leaders said, to allow for signing next year.

"India has significant outstanding issues, which remain unresolved... India's final decision will depend on satisfactory resolution of these issues."

The US-China trade war has given new impetus to years of discussions on the trade bloc. But India decided not to agree to it as it stands due to differences over tariffs, its trade deficit with other countries and non-tariff related barriers, Indian Prime Minister Narendra Modi was quoted as saying.

"Present form of the RCEP Agreement does not fully reflect the basic spirit and agreed guiding principles of RCEP," Mr Modi was quoted saying by Indian public broadcaster Prasar Bharati News Services.

Fifteen countries agree terms for world’s biggest trade pact
(From left) Singapore Prime Minister Lee Hsien Loong, Myanmar State Counsellor Aung San Suu Kyi, Laos Prime Minister Thongloun Sisoulith, Cambodian Prime Minister Hun Sen, New Zealand Prime Minister Jacinda Ardern, Indian Prime Minister Narendra Modi, Chinese Premier Li Keqiang, Thai Prime Minister Prayut Chan-o-cha, Vietnamese Prime Minister Nguyen Xuan Phuc, Australian Prime Minister Scott Morrison, Japanese Prime Minister Shinzo Abe, South Korean President Moon Jae-in, Brunei Sultan Hassanal Bolkiah, Indonesian President Joko Widodo, Malaysian International Trade and Industry Minister Darell Leiking and Philippines Trade Secretary Ramon Lopez at the RCEP Summit in Bangkok. PHOTO: AFP

"It does not address satisfactorily India's outstanding issues and concerns."

India has been worried the agreement, which requires the gradual elimination of tariffs, would open its markets to a flood of cheap Chinese goods and agricultural produce from Australia and New Zealand that would harm local producers.

The Wire quoted Mr Modi as saying: "Our farmers, traders, professionals and industries have stakes in such decisions.

"Equally important are the workers and consumers, who make India a huge market and the third biggest economy in terms of purchasing power parity. When I measure the RCEP Agreement with respect to the interests of all Indians, I do not get a positive answer."

One advantage for South-east Asian countries of including relative heavyweight India in the trade pact would be less domination by China.

Diplomatic and security calculations in the region have shifted under the Trump administration. The US decision to send a lower level delegation to the East Asian Summit and US-Asean Summit this year has raised regional concerns that it can no longer be relied on as a counterweight to China.

Because of the downgrade in the US delegation, officials from only three of the 10 regional countries joined the usual US-Asean meeting.

Commerce Secretary Wilbur Ross said on the sidelines of the summit that the Trump administration was "extremely engaged and fully committed" to the region. - REUTERS

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