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15 countries sign RECP except India which wanted “movement of professionals”
16 November 2020
Reading Time: 3min read
The Regional Comprehensive Economic Partnership (RCEP) was signed by 15 countries yesterday (15 Nov), which provides progressively lower tariffs across many areas in the coming years.
It’s the world’s biggest trade agreement involving 10 ASEAN countries along with China, Japan, South Korea, New Zealand and Australia. Together, the 15 countries make up nearly a third of the world’s population and account for 29 per cent of global GDP.
PM Lee hailed the signing of the RCEP as a major milestone. He said yesterday, “The RCEP is a major step forward for the world, at a time when multilateralism is losing ground and global growth is slowing… I have no doubt that the RCEP is a plus for all of us.”
However, 6 ASEAN and 3 non-ASEAN countries have yet to officially ratify the mega agreement. RCEP will only come into force when these countries have ratified the agreement through their respective parliamentary process of their countries.
India pulls out of RECP
The only country which pulled out of RECP during negotiation was India. It pulled out of RECP talks officially last Nov. When India decided to pull out, its industry leaders lauded the move (‘Exporters, industry laud India’s decision to pull out of RCEP‘, 5 Nov).
The elated chairman of Engineering Export Promotion Council of India, Ravi Sehgal, told the media then, “We welcome the decision in opting out of RCEP… Our MSME unit members were concerned about the possible opening up to Chinese imports; and hence it is a wise decision (to pull out).”
Federation of Indian Export Organisations president Sharad Kumar Saraf said, “Duty-free imports from China, which has economy of scale, and sitting on huge inventory and capacity could have jolted the (India’s) manufacturing beyond recovery and thus crippling exports.”
Federation of Indian Chambers of Commerce and Industry (FICCI) president Sandip Somany told the media also, “Serious apprehensions and reservations on RCEP have been expressed by a large number of sectors including steel, plastics, copper, aluminum, machine tools, paper, automobiles, chemicals, petrol-chemicals and others.”
And added, “Further, there were not enough positive developments in the area of trade in services, including easier mobility for our professionals and service-providers.”
India wants “movement of professionals” but was rebuffed
Indeed, the “movement of workers” clause was a major contention between India and other member countries in the RECP talks. In 2016, India started to pose veiled threats in pulling out of RECP if it couldn’t get concessions in “exporting” its workers out of India.
It was slowly abandoning any further negotiations on trade in goods till there was progress in the area of liberalizing trade in services, including movement of professionals. India informed the other RECP member countries that further negotiations on trade in goods would depend on the progress of negotiations in services trade, especially in the area of “movement of workers”.
At the time, some of the member countries were already resisting India’s push for a deal in services trade. An Indian official told the media in India that no country had offered anything worthwhile in Mode 4 of services (“movement of workers”) in the first round of offers exchanged between the members. “On the other hand, most members are aggressive in goods, and intensive discussions on give and take are happening in the area,” he added.
As talks progressed to 2017, India expressively showed its disappointment over the inadequate progress in talks on services trade liberalization especially for facilitating easier movement of professionals across countries (‘RCEP: India upset over slow progress on services talks‘, 23 May 2017).
India’s Commerce Minister Nirmala Sitharaman told the media at the time, “Progress in negotiations on services is not keeping pace with the kind of progress seen in goods negotiations.” In return for eliminating or reducing tariffs on goods, India wanted the other RCEP member countries to work toward liberalization across all modes of services, including movement of professionals.
India is, of course, always keen that any free trade agreements should also ensure easier “movement of professionals”, since it is a “leading services supplier” in the world with a large pool of “skilled workers”.
Finally, with the “movement of professionals” stalled at RECP talks as well as fear of China, India finally pulled out of RECP last year.
Nevertheless, PM Lee said he hopes that India will be able to come on board at some point so that “the participation in the RCEP will fully reflect the emerging patterns of integration and regional cooperation in Asia”
