​RCEP trade ministers to resolve logjam on goods, services, tiered approach

NEW DELHI: Trade ministers from the 16-member Regional Comprehensive Economic Partnership ( RCEP) will meet on Friday to try and break an impasse in negotiations that have stalled over the three-tier tariff liberalisation structure, the number of services to be liberalised and the increasing tariff cuts for goods.

“There was no agreement in the last round of talks on offers in goods, number of services to be opened up and whether to continue with the tiered approach. The trade negotiations committee is looking for directions from the ministers on these issues,” said an official privy to the details. The ministerial meeting in Laos assumes significance as RCEP talks have not made any substantial progress since August last year, when members finalised the initial offers for tariff liberalisation of goods.

The pre-ministerial meeting in Indonesia last month also failed to find consensus on these issues.

Moreover, Commerce Minister Nirmala Sitharaman will have to convince others about India’s stance of a single undertaking for each area — goods, services and investment — since it is not keen on an early harvest, which means reaping the benefits of each negotiating area as they ripen. RCEP is a comprehensive free-trade agreement including goods, services, investment, competition and intellectual property rights proposed between the 10 Asean countries and its six free-trade agreement partners — Australia, China, India, Japan, Korea and New Zealand.

CONTENTIOUS ISSUES
While the initial offers for duty cuts on goods were finalised last year, talks have been stuck because India first wants movement in services and investment, instead of setting a final number for tariff reduction.

India maintains that it wants opening up of services in the pact but there is no clarity on how many of the 160-odd services would be covered in the agreement.

“We are looking for access to the developed countries’ services and mode 4 (movement of professionals) is our preference but the offers there are not good,” the official said, adding that Asean is the least ambitious on services.

Another problem area is investment, where the idea of an investor-state dispute settlement mechanism has not attracted much enthusiasm. Only India has submitted a text for the same.

The trade ministers are also likely to give their guidance on the basic tenet of the RCEP – its three-tier approach. Under this structure, tariff reduction is based on each country’s free-trade agreement with Asean and other members.

While Asean, Japan and Australia want to dissolve the three-tier structure around which negotiations have taken place for the past three years, India, China and Korea — the original proponents of this approach — want to retain it.