Resolution-2 (Madurai Sammelan)-E

13th National Convention, 18, 19, 20 January 2019 (Madurai, Tamil Nadu)

Resolution-2 (E)
RCEP: Not in India’s Interest

Swadeshi Jagran Manch has been watching the developments with regard to RCEP. So far, the approach of the Indian government has been that of cautiously engaging in the RCEP. National convention of SJM believes that RCEP presents a major threat and not a major opportunity by India as has been reported under major sections of press quoting government sources. Despite the fact that starting from 2012, 24 rounds of negotiations have already been completed, however these negotiations did not make any headway thanks to the approach of Indian negotiators, not yielding to the pressures of other member countries of RCEP. Member countries including India have been wary of fall-outs of the proposed agreement. RCEP is a proposed free trade agreement involving 16 countries. They include 10 ASEAN countries namely, Indonesia, Malaysia, Philippines, Singapore, Thailand, Brunei, Vietnam, Laos, Myanmar, Cambodia and 6 more countries Japan, South Korea, Australia, New Zealand, India and China. 16 RCEP countries which house 3.4 billion people or to say 45 percent of the world's population; with a combined GDP at Purchasing Power Parity (PPP) of about 49.3 trillion US dollar, which is approximately 39 percent world's GDP and it accounts for nearly 30 percent of the global trade. Therefore, we can say that this free trade agreement if signed would be a largest free trade agreement in the post WTO period and therefore RCEP would be the world's largest economic block.

Market access is in the centre of the proposed RCEP agreement. This means that as RCEP partner country, India would be required to bring tariff to zero on most of the items of import from other member countries. According to original proposals, RCEP member countries want import duty to be brought to zero on 90 to 92 percent items. Although India has made several proposals including 3-tier tariff reduction, one for ASEAN countries, 2nd for existing FTA partners and 3rd for those countries with whom India does not have FTA namely New Zealand, Australia and China. As reported, India is being asked to improve its offer to RCEP partners. India has major challenges from China in industrial goods. China already accounts for about half India’s total trade deficit. Even with 74% of goods offered at 0 duty (which is India’s current offer) this deficit will increase manifold and also threaten India’s manufacturing growth potential. The survival of Indian SMEs will be in question.

The experience of India with FTA's has not been very encouraging, especially in the region. After signing ASEAN FTA, out Trade deficit with ASEAN countries has increased from 7.7 billion US dollars in 2009-10 to 13 billion US dollar in 2017-18. There has been a significant increase in imports from countries like Malaysia and Indonesia during this period. Similar has been the experience with Japan and South Korea with whom our Trade deficit has more than doubled. With the current trade deficit reaching its peak, it is even more difficult for India to offer duty free access to imports without forcing its producers to suicide. We must not forget that Australia’s export competitiveness in wheat, dairy and meat products, and New Zealand’s role as a major global dairy exporter accounting for 30% of global dairy exports will make Indian agriculture and dairy sectors totally vulnerable post RCEP.

The only argument which the negotiators from Indian government can give in favor of the RCEP is that we may get some favor from member countries with respect to concession in trade in services, where India is said to have aggressive interest. It is being considered that India will gain in terms of liberalizing services, however the experience has so far not been very encouraging whereas India has open door policy for professionals coming from partner countries of ASEAN whereas these countries have domestic regulation in place which restrict the Indian nationals to find employment in major countries. Further, RCEP covers many areas where policy space of the government will be restricted. Firstly, India is being asked to accept provisions on domestic regulation in services, which will restrict India’s policy space and even that of state& local governments, in many ways.

Further indications are that Japan and South Korea are proposing intellectual property (IP) provisions referred to as TRIPS-plus, which go far beyond the obligations under the World Trade Organisation’s Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS).

The proposed provisions seek to extend pharmaceutical corporations’ patent terms beyond the usual 20 years and also would require data exclusivity that limits competition. Data exclusivity and extending patent beyond 20 years and other provisions are a cause for great concern with respect to public health, because of their potential adverse impact on access to affordable medicines. In the Intellectual Property Chapter, any agreement that constrains our farmers’ ability to produce, preserve, exchange and sell seeds needs to be categorically rejected. If India makes any agreement on International Union of New Plant Variety (UPOV) 1991 or anything similar, it will simply kill livelihood of Indian farmers

We are seeing the impact of our investment agreements that have given companies huge power to sue our government and challenge its powers. It is sacrificing policy space in addition to losing huge revenue through compensations. We urge the government to not make concession on investment. India must not give up its policy stance on investment chapter in RCEP and should not accept a diluted position compared to its Model Bilateral Investment Treaty (BIT) text.

We are hearing that India may agree to some provisions in e-commerce chapter very soon. Given the wide policy and regulatory impacts of the digital economy, this will be total blunder and a matter of putting the cart before the horse. When India’s domestic policy on e-commerce and the digital economy is being debated within the country, and any clear policy is yet to be formed, we should not tie up our hands in trade agreements in any way. That will simply increase the monopoly powers of the giant digital corporations whose might we are already seeing in India.

SJM believes that the RCEP is not in the interest of the people of India. There is no sector, no constituency, or no region in India that will benefit from RCEP. Given the impending elections in 2019, it will be a disaster for the government to sign or even make commitments giving concessions on specific chapters.

The National Convention of SJM urges upon the government to not to go ahead with RCEP negotiations to safeguard national interests in general and interest of manufacturing sector farmers, dairy and public health in particular.