Civil society organisations question govt on RCEP’s benefits when India’s economy is slowing
The groups have asked the government as to why it was involved in e-commerce negotiations on the RCEP trade agreement when it is opposed to even engaging on the subject at the World Trade Organization.
the proposed Regional Comprehensive Economic Partnership (RCEP) trade agreement especially when the economy is going through a period of slowdown and there are apprehensions from many sectors.
They said various sectors of the Indian economy including agriculture, dairy, services and data would be impacted, going by the leaked texts of the agreement and asked why the government is involved in e-commerce negotiations in the pact when it is opposed to even engaging on the subject at the World Trade Organization (WTO).
Stating that major manufacturing sectors are facing serious headwinds, essentially due to sagging domestic demand, the Forum For Trade Justice said: “Acceding to RCEP at this juncture will accentuate the uncertainties and could result in loss of jobs and incomes which the country can ill afford”.
“We would like to know the sectors that will benefit from RCEP and if the government has done any analysis for this. When India’s own growth is dipping, does it make sense to share it with the others,” said Biswajit Dhar, professor at Jawaharlal Nehru University.
He said that India had foregone revenues of $5.3 billion due to preferential rates under FTAs in 2018 and at the same time considering releasing sovereign bonds to get some funds.
The Indian economy grew 5% in the first quarter of the current financial year and most multilateral institutions have scaled down the country’s growth forecast for the year. The International Monetary Fund on Tuesday cut India's growth forecast for 2019 to 6.1% % from the 7% made in July and by 1.2% from the 7.3% in April.
The key sticking point for India in RCEP is its trade deficit with China which is feared to increase once the pact is in place and has proposed different levels of tariff concessions for China to safeguard its domestic industry from cheap imports.
“Tariff differential with China will be meaningless as they can use the rules of origin which allow any product with some value creation in the RCEP region to enter Indian markets duty free,” said Ranja Sengupta of The Third World Network.
Dhar said that there are apprehensions about the proposed safeguards and the auto trigger mechanism to check sudden surge in imports.
The organisations also highlighted the vulnerability of India’s agricultural sector. “The drastic reduction in import duty and flooding of cheap agricultural produce will negatively impact farmgate prices in India,” said Yudhvir Singh, All India Coordination Committee of Farmers Movements.
However, he raised questions at the government’s estimates of milk production and the number of families associated with the dairy sector.
“80% of the milk is produced and consumed locally and doesn’t reach the dairy sector. 12 crore families are linked with the sector and not 1.5 crore,” he said.
The groups also expressed concern at the rules on investment and e-commerce. Referring to a leaked draft of the investment chapter of the agreement, they said Japan wants a ban on caps on royalty payments and technology transfers, something that will be a drain on India’s revenues.
They said India is negotiating ‘standstill’ and ‘ratchet’ clauses which mean that the governments have to freeze their current levels of market opening, and if they liberalise more they cannot go back.
Moreover, New Delhi is said to be seeking exclusion from ratchet only on the controversial investor state dispute settlement (ISDS) and that too pertains to taxation to avoid cases like Vodafone.
“Intellectual property and compulsory license are also investments which are protected in the bilateral
investment treaties in ‘public interest exceptions’ but not in RCEP”, they said.
On the issue of data localisation, the groups warned that “accepting free global data flows as per RCEP demands is to give up all data policy space and data sovereignty”.
India has proposed locating computing facilities inside the country if it is meant to protect its essential security interests and national interests.
“Such public policy exemptions have never worked effectively, especially for developing countries,” they cautioned and said that India’s involvement in e-commerce negotiations at RCEP was unexpected as it doesn’t even talk about the subject at the WTO.
“India is also said to be showing flexibility in e-transfers and authentication related issues. With China’s presence in the group, all technology flows will get tilted towards China”.
On services, the organisations asked if India is ready to accept labour coming from Myanmar, which is an RCEP member.