Experts are cautious about the Regional Comprehensive Economic Partnership (RCEP) negotiation, as India has reported a trade deficit with as many as 11 RCEP member countries in the 2018-19 fiscal.
The RCEP is a proposed Free Trade Agreement (FTA) between 10 member states of the Association of South-East Asian Nations (ASEAN) and the six Asia-Pacific states with which ASEAN has existing free trade agreements.
The RCEP bloc comprises 10 ASEAN group members, namely Brunei, Cambodia, Indonesia, Malaysia, Myanmar, Singapore, Thailand, the Philippines, Laos and Vietnam; and their six FTA partners — India, China, Japan, South Korea, Australia and New Zealand.
According to the provisional trade data, India’s trade deficit with three countries — Brunei, Japan and Malaysia — has in fact increased marginally in FY 2018-19 as compared to the previous fiscal. Trade deficit is the difference between imports and exports.
Also, the trade surplus with Singapore ($2.7 billion) in FY18 has turned into deficit of $5.3 billion in FY19. India has trade surplus with Cambodia ($0.1 billion), Myanmar ($0.7 billion), and the Philippines ($1 billion) in FY19; it did not carry out any trade with Laos last year.
Senior officials of the RCEP group, who are negotiating a mega free trade agreement, will hold meetings in Bangkok from May 24 to iron out issues pertaining to the goods and services sector. Experts have mixed views over the impact of the increasing trade gap on India’s position during the negotiations for the mega FTA.
While India is likely to get greater market access in other countries not only in goods but also in services, many experts have cautioned that the pact would impact domestic manufacturers. “Free trade pacts are not about only giving market access, but also getting that access in other countries. Our exports to countries like Singapore, with which India has trade surplus, is not increasing. In FY 2018-19, we have a trade deficit with Singapore,” said Biswajit Dhar, Economics professor at JNU.
Member countries are looking to conclude the talks this year, but many issues, including the number of products over which duties will be eliminated, are yet to be finalised.
