India’s concerns slowing RCEP talks

Image: India's concerns slowing RCEP talks
Image Source: asean.org

India’s reservations regarding the potential adverse impact of eliminating duties on its local manufacturing and job creation is understood to be slowing down the Regional Comprehensive Economic Partnership (RCEP) negotiations.

The RCEP is a proposed mega Free Trade Agreement (FTA) involving 16 Asia Pacific nations including India and China, and aims, among other things to liberalise investment norms in the region, besides boosting trade by dismantling most tariff and non-tariff barriers.

Many economists and scholars have pointed that the growth potential of Asia Pacific region is immense and if we remove or reduce barriers in trade, we can reap its full potential. However, the pace at which RCEP (which seeks to remove such trade barriers) negotiations are going, it is not expected to see the light of day any soon.

Also read: Forum concerned at ‘secret’ RCEP talks

Also read: Zero duty to hit Indian dairy industry:Amul

On Indian side, Indian companies and trade bodies, including CII, are pointing out their concerns. They are of the opinion that the RCEP will lead to low or no import duties which would hit the Indian industries and eventually render people jobless. They also opine that it will hit Indian manufacturing industries and eventually ‘Make in India’ initiative would be affected.

About Regional Comprehensive Economic Partnership (RCEP):

To know in detail about the organisation, read this International Organisation: Regional Comprehensive Economic Corridor

Regional Comprehensive Economic Partnership (RCEP) is a proposed free trade agreement (FTA) b/w the ten member states of the Association of Southeast Asian Nations (ASEAN), viz. Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam, and the six states with which ASEAN has existing free trade agreements, viz. Australia, China, India, Japan, South Korea and New Zealand.

Image: RCEP member countries infographics

RCEP will cover trade in goods, trade in services, investment, economic and technical cooperation, intellectual property, competition, dispute settlement and other issues.

Reference(s):

The Hindu (You can download ‘The Hindu’ newspaper for free from a link given on this FB page – UPSC Aspirants Forum)

 

ZERO DUTY TO HIT INDIAN DAIRY INDUSTRY: AMUL

Image: Zero duty to hit Indian dairy industry amul
Image Source: verka.coop

The Indian dairy sector, providing livelihood to 15 crore farmers, would be severely hit if import duties on milk and milk products were eliminated under any Free Trade Agreement (FTA) including the Regional Comprehensive Economic Partnership (RCEP), according to the local dairy cooperative Amul.

Separately, farmers’ organisations have threatened to hold nationwide protests if the dairy sector is opened up under the RCEP – the proposed mega-regional FTA involving 16 Asia-Pacific nations including India – or any other FTA including those proposed separately with Australia or New Zealand.

Also read: Forum concerned at ‘secret’ RCEP talks

Zero duty or reduced import duty under any FTA will risk the indigenous dairy industry due to influx of cheaper dairy products, particularly from RCEP members like Australia and New Zealand. Currently, the duty on milk and milk products ranges from 40% to 60%, which gives the local industry enough protection to build its competitiveness.

Australia and New Zealand control more than 35% of the global dairy trade and more than 50% of the intra-RCEP trade.

About Regional Comprehensive Economic Partnership (RCEP):

To read in detail about RCEP and its pros and cons for our country, read this: About RCEP.

RCEP is a proposed free-trade FTA b/w the ten member states of the Association of South East Asian Nations (ASEAN) and the six states with which ASEAN has existing free trade agreements.

Image: RCEP member countries infographics

RCEP was set up in November 2012 in Cambodia.

Cumulatively, the grouping of 16 nations include more than 3 billion people and has a combined GDP of $17 trillion. It accounts for about 40% of world trade.

 

Reference(s):

The Hindu Newspaper (You can download it for free from a link given on this FB page – UPSC Aspirants Forum)

 

Forum concerned at ‘secret’ RCEP talks

Image:

Civil society organisations and trade experts on Sunday raised concern over the negotiations regarding a proposed mega-regional Free Trade Agreement (FTA) involving 16 Asia-Pacific nations, including India and China.

Technical level talks of the proposed FTA, officially known as the Regional Comprehensive Economic Partnership (RCEP), are being held at the Hyderabad International Convention Centre from July 18 to 28. The RCEP, inter alia, aims to liberalise investment norms as well as boost trade by eliminating/drastically reducing import duties on goods and bringing down ‘barriers’ in the services sector.

After a day-long meeting, the People’s Resistance Forum against FTAs and RCEP, an umbrella body representing farmers, industrial workers and service sector employees, street vendors, HIV-positive persons, tribal people, environmental activists and women’s organisations, among others, said in a statement that the RCEP would have wide-ranging impact on agriculture, services, access to medicines, investment and e-commerce.

About Regional Comprehensive Economic Partnership (RCEP):

To read in detail about the organisation, click here.

Regional Comprehensive Economic Partnership (RCEP) is a proposed free trade agreement (FTA) b/w the ten member states of the Association of Southeast Asian Nations (ASEAN), viz. Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam, and the six states with which ASEAN has existing free trade agreements, viz. Australia, China, India, Japan, South Korea and New Zealand.

Image: RCEP member countries infographics

RCEP will cover trade in goods, trade in services, investment, economic and technical cooperation, intellectual property, competition, dispute settlement and other issues.

 

Reference(s):

The Hindu (You can download ‘The Hindu’ newspaper for free from UPSC Aspirants Forum – a facebook page)

International Organisation: REGIONAL COMPREHENSIVE ECONOMIC PARTNERSHIP (RCEP)

Image: RCEP members
Image Source: asean.org

What is RCEP?

Regional Comprehensive Economic Partnership (RCEP) is a proposed free trade agreement (FTA) b/w the ten member states of the Association of Southeast Asian Nations (ASEAN), viz. Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam, and the six states with which ASEAN has existing free trade agreements, viz. Australia, China, India, Japan, South Korea and New Zealand.

Image: RCEP member countries infographics

RCEP was set up in November 2012 at the ASEAN Summit in Cambodia.

Cumulatively, the grouping of 16 nations includes more than 3 billion people and has a combined GDP of about $17 trillion. It accounts for about 40% of world trade.

Key Features of the RCEP

The RCEP seeks to achieve a modern and comprehensive trade agreement among members. The stated goal of the negotiations is to “boost economic growth and equitable economic development, advance economic cooperation and broaden and deepen integration in the region through the RCEP.”

It would be a powerful vehicle to support the spread of global production networks and reduce the inefficiencies of multiple Asian trade agreements that exist presently.

At the launch of negotiations in 2012, the leaders of each relevant country endorsed the “Guiding Principles and Objectives for negotiating the Regional Comprehensive Economic Corridor”. The key points of the document are as follows:

(A) Scope of Negotiation

RCEP will cover trade in goods, trade in services, investment, economic and technical cooperation, intellectual property, competition, dispute settlement and other issues.

(B) Negotiations for Trade in Goods

Negotiations should aim to achieve the high level of tariff liberalisation, through building upon existing liberalisation levels b/w participating countries.

(C) Negotiations for Trade in Services

The RCEP will be comprehensive, of high-quality and consistent with WTO rules and all service sectors will be subject to negotiations.

(D) Negotiations for Investment

Such negotiations will cover the four pillars of promotion, protection, facilitation and liberalisation.

(E) Participating Countries

Participant will be ASEAN members and FTA partners. After the completion of the negotiations, countries other than 16 members may join.

 

What is the significance of RCEP for India?

Significance are:

  • From India’s point of view, the RCEP presents a decisive platform which could influence its strategic and economic status in the Asia-Pacific region and bring to fruition its “Act East Policy.”

 

  • The RCEP would enable India to strengthen its trade ties with Australia, China, Japan and South Korea, and should reduce the potential negative impacts of TPP and TTIP on the Indian economy. [India is not party to two major trade agreements: Trans-Pacific Partnership (TPP) and Trans-Atlantic Trade and Investment Partnership (TTIP)]

 

  • The RCEP agreement would complement India’s existing free trade agreements with the ASEAN and some of its member countries. This consolidation can address challenges emanating from implementation concerns vis-à-vis overlapping agreements, which is creating a “noodle bowl” situation obstructing effective utilization of these FTAs.

 

  • Gets India closer to ASEAN

Clubbing with the ASEAN has been a principal policy priority for both China and India. At present, while China has clubbed with the ASEAN+1, ASEAN+3 and ASEAN+6, India is clubbed only under the ASEAN+6 framework.

 

  • India enjoys a comparative advantage in areas such as information and communication technology, IT-enabled services, professional services, healthcare, and education services. In addition to facilitating foreign direct investment, the RCEP will create opportunities for Indian companies to access new markets.

 

What are the disadvantages of RCEP for India?

  • India is known as the ‘pharmacy of developing countries’ because it supplies cheap generic medicines to them. India is able to do so because of favourable data exclusivity norms. However, Japan and South Korea have been pressurising the member nations of the group to extend the data exclusivity time. If this happens, people have to wait for another extended years to get access to generic medicines.

Data exclusivity is a kind of intellectual property protection wherein clinical trials and other data submitted by an originator drug company cannot be used or relied upon by a drug regulatory authority to approve generic version of that drug for a certain period of time.

  • Study by Commerce Ministry indicates that it can lead to a revenue loss of 1.6% of the GDP.
  • Joining the bloc can result in cheaper imports from China as China offers low price and better quality.
  • Competition with Indonesia and Philippines can reduce the benefits of service trade within the bloc.
  • Domestic issues may arise due to such alliance such as harm domestic manufacturing, leather industry etc.

 

Reference(s):

RCEP

 

http://www.civilsdaily.com/story/regional-comprehensive-economic-partnership-rcep/

 

 

G-20 HAMBURG ACTION PLAN & INDIA

The G-20 Hamburg Action Plan acknowledged India’s efforts to reform and thus made a boost to India’s expectation with respect to ranking for ease of doing business.

Image: Narendra Modi in G-20 Summit

Acknowledging the steps being taken by India for sustainable and inclusive growth as well as support to global economy, the G-20 has praised the initiatives in the country for promoting ease of doing business, start-up funding and labour reforms.

In its Hamburg Action Plan, adopted at the G-20 Summit, the group noted that India is facilitating external commercial borrowings (ECBs) by startups to encourage innovation and promote ease of doing business.

On steps being taken by G-20 countries for promoting inclusive growth this year, the Action Plan said India is introducing labour market reforms to provide security to workers, increase female participation in the work force and make doing business easier in the country.

The group also noted that in the financial sector, India is popularising a number of derivative instruments in exchanges or electronic trading platforms as part of the measures to enhance resilience of its economy.

What these acknowledgement from G-20 Summit mean to India?

India is trying hard to improve its global ranking for ease of doing business. These acknowledgements have come as a latest boost to hopes for better ranking for India in terms of ease of doing business.

Last year, the World Bank ranked India at 130th position which was in contrast to India’s plan to get ranked in the top-50 nations in terms of ease of doing business. However, these acknowledgements might improve India’s ranking which is expected to come later this year.

As per the World Bank ranking, the areas where India ranks poorly include starting a business, dealing with construction permits, registering property, paying taxes, trading across borders, enforcing contracts and resolving insolvency.

However, in the recent months, the country has implemented a spate of reforms in some of these areas like insolvency, taxation and starting a business.

About G-20:

To read in detail about G-20, click here

The Group of Twenty (G-20) is an international forum that brings together the world’s leading industrialised and emerging economies. The group accounts for 85% of world GDP and 2/3rd of its population.

It was founded in 1999 with the aim of studying, reviewing, and promoting high-level discussion of policy issues pertaining to the promotion of international financial stability.

The G-20 operates without a permanent secretariat or staff. The incumbent chair establishes a temporary secretariat for the duration of its term. The group’s chair rotates annually among the members and is selected from a different regional grouping of countries.

It is not governed by any written rules or laws.

All the decisions are collectively taken, there is no voting process and no decision is made at the discretion of a single party.

The member of G-20 are: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, U.K., U.S., and European Union.

 

References:

The Hindu

 

 

GROUP OF TWENTY (G-20)

The Group of Twenty (G20) is an international forum that brings together the world’s leading industrialised and emerging economies. The group accounts for 85% of world GDP and 2/3rd of its population.

Image: G-20 countries
Image Source: United Global Asset

History:

It was founded in 1999 with the aim of studying, reviewing, and promoting high-level discussion of policy issues pertaining to the promotion of international financial stability.

The forum was created at the initiative of the seven major industrial countries (Canada, France, Germany, Italy, Japan, U.K. and USA) to promote consultations and coordination with the emerging and developing economies.

Initially, attendance at G-20 summits was limited to the finance ministers and central bank governors of members, when it was established 18 years ago. But since an inaugural meeting between G20 leaders in Washington DC following the collapse of Lehman Brothers in 2008, summits between G20 leaders themselves have become an annual event.

The G20 leaders’ summit was created as a response both to the financial crisis of 2008 and to a growing recognition that key emerging countries were not adequately included in the core of global economic discussion and governance.

The heads of the G-20 nations met semi-annually at G-20 summits between 2008 and 2011. Since the November 2011 Cannes summit, all G-20 summits have been held annually.

Aim and Objective:

Its primary aim is to promote international financial stability through discussions.

Though the G-20’s primary focus is effective global economic governance, the themes of its summits vary from year to year.

About G-20:

The G-20 operates without a permanent secretariat or staff. The incumbent chair establishes a temporary secretariat for the duration of its term. The group’s chair rotates annually among the members and is selected from a different regional grouping of countries.

It is not governed by any written rules or laws.

All the decisions are collectively taken, there is no voting process and no decision is made at the discretion of a single party.

Each year, the G20’s guests include Spain; the Chair of ASEAN; two African countries (the Chair of the African Union and a representative of the New Partnership for Africa’s Development) and a country (sometimes more than one) invited by the presidency, usually from its own region. In addition to these 20 members, the chief executive officers of several other international forums and institutions participate in meetings of the G-20. These include high level representatives of the International Monetary Fund, the World Bank, etc.

The Leaders’ “Declaration” or “Communique” is the final outcome of G20 Summit. It highlights the progress made in the G-20 work in the past year, the G20 deliverables in the following year and the strategies and action plans to achieve these deliverables.

The group formally announced that it would replace the G8 as the main economic council of wealthy nations.

MEMBERS OF G-20:

Image: waving flags of G-20 countries

The member of G-20 are: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, U.K., U.S., and European Union.

The EU is represented by the European Commission, rotating Council presidency and the European Central Bank (ECB).

CRITICISM:

  • No representation for some major economies like Spain, Poland, etc.
  • Efficient Global Economic Governance is the objective of G-20. But most of the decisions taken are no way related to the economic wellbeing of underdeveloped nations.
  • Under-representation of the African continent. There is only one representation from Africa.
  • Although Norway is a major developed economy and the seventh-largest contributor to UN international development programs, it is not a member of the EU, and thus is not represented in the G-20 even indirectly.
  • Efforts to reform world’s financial institutions met with limited success due to lack of consensus between developing and developed nations.
  • The G-20’s transparency and accountability have been questioned by critics. Most important G-20 meetings are closed-door.
  • The cost and extent of summit-related security is often a contentious issue in the hosting country.
  • G-20 summits have attracted protesters from a variety of backgrounds, including information activists, environmentalists and opponents of crony capitalism.