12 Nov 2019
ASIA: India Opts Out as 15 Asia-Pacific Nations Conclude Multilateral Free Trade Agreement
Negotiations have been concluded between 15 Asia-Pacific countries with regard to a multilateral Free Trade Agreement (FTA). The signatories to the agreement are the 10 member states of the Association of Southeast Asian Nations (ASEAN) and five of the countries with which the bloc has existing FTAs – Australia, China, Japan, South Korea and New Zealand. India, also an ASEAN FTA partner, declined to be a party to this latest treaty shortly before talks concluded earlier this month. Formally entitled the Regional Comprehensive Economic Partnership (RCEP), the agreement will be officially signed early next year, once the text has been ratified by all the governments concerned.
Although the minutiae of the trade pact, including the applicable tariff rates and the tariff reduction schedules, has yet to be announced, it is believed that within its remit are enhanced rules for the trade in services. A single set of rules governing certificates of origin, improved mechanisms for addressing non-tariff barriers and more comprehensive investment guarantees for businesses. It is also said to provide simplified travel arrangements for commercial purposes, streamlined e-commerce regulations, a shared intellectual property regime and a raft of region-wide SME development initiatives.
India’s last-minute decision not to participate has been widely seen as due to concerns over the likely adverse effect of agricultural free trade on the country’s small farmers, as well as fears of a potential influx of cheap Chinese goods. In a joint statement, the leaders of the participating nations, however, confirmed their commitment to continue working with India to resolve any issues and to, ultimately, pave the way for its inclusion in the treaty at a later date.
With or without India, the formal adoption of the RCEP agreement will create one of the world’s largest free trade areas, representing a combined population of 3,615 million people and a GDP in excess of US$27 trillion.