Upasi for keeping plantation commodities under RCEP exclusion list
As per the association’s analysis, the trade deficit for the plantation commodities was Rs 5,716.64 crores with RCEP countries during 2018-19 , while the overall trade surplus stood at Rs 4,368 crore.
Upasi president ALRM.Nagappan said as per the association’s analysis, during 2018-19 the trade deficit in the plantation commodities was Rs. 5,716.64 crores with RCEP countries, while the overall trade surplus in it was Rs. 4,368 crores.
``This indicates that plantation commodities will be losing significantly if the RCEP agreement materialises and we fear that further reduction in tariff proposed can only worsen the trade deficit in the plantation commodities and will make things miserable for the sector, which is already facing challenging times on account of low prices vis-à-vis high cost of production,’’ he said in a statement on Thursday.
According to him, the plantation commodities like tea, coffee, natural rubber, cardamom, pepper were exposed to international competition since April 2001, when the quantitative restriction was lifted as per the commitments under WTO. The signing of the ASEAN agreement in 2009 further opened up the Indian market to the plantation producing countries like Indonesia, Vietnam, Malaysia, Thailand etc.
Under the ASEAN agreement, the import duties were gradually reduced since 2009 for tea, coffee and pepper while natural rubber, cardamom and few tariff lines on coffee were kept under exclusion list. The current import tariff for ASEAN countries is 50% for tea and coffee (100% under WTO for other countries) and 51% for pepper (70% under WT0).
Among the five plantation commodities, natural rubber and pepper have an overall trade deficit, irrespective of RCEP. High trade deficit in natural rubber suggest the wrong classification of NR as industrial raw material and thereby lower bound duty fixed at 25%, which aided large scale imports. This is despite NR being kept under exclusion list under ASEAN agreement.
In pepper, due to multiple bilateral [Indo Sri Lanka] and multi-lateral trade agreements [SARC, SAFTA & ASEAN], the trade deficit had increased over the years and with RCEP countries it was Rs 415.31 crores during 2018-19. Coffee being an export dominated commodity and with more than 75% being exported, India has an overall trade surplus of Rs. 4763.4 crore but with RCEP countries the trade deficit is at Rs 164.35 crores, indicating that Indian coffee sector will be a loser.
China the partner country in the proposed RCEP pose challenges and it being the largest tea producer and its ability to produce to the needs of the export market in quick time, is an immense threat to the Indian tea sector. Though China is a largest green tea producer in the world it also produces black CTC teas for the export market and with duty advantage and logistical advantage it may target Indian market.
"Moreover, we fear that the rules of origin (RoO) criteria will be taken advantage of to route tea through any of the ASEAN countries who have a duty advantage, vis-a-vis China. The recent instance of Vietnamese pepper coming through Sri Lanka is a case in point in this regard,’’ Nagappan pointed out.