Fifteen Asia-Pacific countries have concluded negotiations for a trade pact that would be among the world’s largest while India said it would not join due to differences over tariff issues.
A summit of the leaders of the Regional Comprehensive Economic Partnership (RCEP) left open the door for India to still join if it can resolve issues before the deal is set to be signed in 2020.
Fifteen of the 16 prospective RCEP states ‘have concluded text-based negotiations for all 20 chapters and essentially all their market access issues,’ said the leaders’ statement, which included India.
The RCEP countries include the 10 members of the Association of Southeast Asian Nations, plus China, Japan, South Korea, Australia and New Zealand.
India has decided not to sign the Regional Comprehensive Economic Partnership due to differences over tariffs, its trade deficit with other countries and non-tariff related barriers, prime minister Narendra Modi was quoted as saying on Monday.
‘Present form of the RCEP Agreement does not fully reflect the basic spirit and agreed guiding principles of RCEP,’ Modi was quoted saying by Indian public broadcaster Prasar Bharati News Services in a tweet. ‘It does not address satisfactorily India’s outstanding issues and concerns.’
‘It is not possible for India to join the #RCEP Agreement,’ the broadcaster further quoted Modi as saying in the tweet.
India has been worried that the agreement, which requires the gradual elimination of tariffs, will open up the country’s domestic markets to a flood of cheap Chinese goods and agricultural produce from Australia and New Zealand that will harm local producers.
But China, a champion of the RECP, said that 15 members had agreed to move ahead without India, while leaving the door open for it to join a deal that has been given new impetus by the United StatesChina trade war.
Despite a message of support from US president Donald Trump to the Association of Southeast Asian Nations (ASEAN), regional countries noted that Washington had downgraded its delegation for the annual Asian gathering.
Southeast Asian countries hoped to announce at least provisional agreement on the 16-nation trade bloc, which would account for a third of global gross domestic product and nearly half the world’s population.
But demands raised recently by India meant negotiations among ministers went late into the night.
Thai commerce minister Jurin Laksanawisit told reporters that the 16 countries had reached agreement and would make a statement later on Monday — while acknowledging that some details still needed to be sorted out.
He said that the plan was to sign the deal next year, under Vietnam’s chairmanship of ASEAN.
But Chinese vice-foreign minister Le Yucheng said that 15 countries had decided to move ahead first.
‘The text based negotiations have been completed and issues of market access have been essentially concluded,’ he said. ‘Whenever India is ready, they are welcome to come on board.’
New impetus to complete the deal has come from the trade war, which has knocked regional growth, but India fears a potential flood of Chinese imports and officials with knowledge of the negotiations said India had raised late demands.
One advantage for Southeast Asian countries of including relative heavyweight India in the trade pact would be less domination by China.
Diplomatic and security calculations in Southeast Asia have shifted under the Trump administration.
And the US decision to send a lower level delegation to the back-to-back East Asian Summit and USASEAN Summit this year has raised regional concerns that it can no longer be relied on as a counterweight to China’s increasing might.
Because of the downgrade in the US delegation, officials from only three of the 10 regional countries joined the usual US-ASEAN meeting.
US commerce secretary Wilbur Ross told a business meeting on the side-lines of the summit that the administration of US president Donald Trump was ‘extremely engaged and fully committed’ to the region.
White House national security adviser Robert O’Brien brought a personal message from Trump offering to host a meeting of Southeast Asian leaders in the United States.
He also condemned Chinese ‘intimidation’ in the South China Sea, where several regional states reject China’s sweeping maritime claims and complain that Beijing is illegally stopping them from exploiting their energy resources and fishing grounds.
But diplomats and analysts said that the message from Washington was clear.
‘Doubts have been raised in a more serious way about the Trump administration engaging and this may also play into the hands of other superpowers in pushing their own agendas,’ said Panitan Wattanayagorn, a former Thai national security adviser.
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