RCEP deal well received; India's absence disappoints

Tuesday 5th November 2019

News that 15 of 16 nations managed to agree to the 20-chapter Regional Comprehensive Economic Partnership trade deal has been well received although India’s absence is disappointing.

“It is regrettable negotiating partners were unable to conclude an acceptable market access outcome with India at this time,” Prime Minister Jacinda Ardern said in a statement.

“However, New Zealand respects India’s right to take its own decisions on the agreement. We will continue to work closely with India to seek to agree a market access outcome that is commercially meaningful and which will enable India to join the other RCEP parties,” she added.

Yesterday in Bangkok, the heads of state of the Association of Southeast Asian Nations – ASEAN - and Australia, China, India, Japan, Korea, and New Zealand said “15 RCEP participating countries have concluded text-based negotiations for all 20 chapters and essentially all their market access issues; and tasked legal scrubbing by them to commence for signing in 2020.”

India, however, had “significant outstanding issues, which remain unresolved.” The statement said all RCEP participating countries would “work together to resolve these outstanding issues in a mutually satisfactory way.”

Access to India’s highly protected market – with a nominal gross domestic product of US$2.7 trillion – was a key goal for New Zealand exporters.

Minister of State for Trade and Export Growth Damien O’Connor noted that even without India, “RCEP participants take 61 percent of our goods exports and 50 percent of our services exports. RCEP is of considerable commercial and strategic value to New Zealand.”

Ardern underscored the deal also provides "an important boost to the regional economy at a time of rising turbulence and slowing global trade and economic growth."

Exporters agreed.

“RCEP represents a significant portion of the world’s economy and we expect that this will continue to grow with the increased cooperation and trade between countries that are signatories to the agreement,” said Beef + Lamb New Zealand chief executive Sam McIvor.

“While we are disappointed that India is not yet a signatory to this deal, we hope that over time they will come to see the benefits that it offers and will join the agreement in the future.”

Catherine Beard, executive director of ExportNZ, said while it was disappointing India was not currently in the deal, it was positive for New Zealand because it helped align 15 countries on trade rules in the region.

“It goes some way to dealing with the noodle bowl of trade deals to have 15 countries playing by the same rules,” she said.

She also noted that if it led to easier cross-border trade, it would become more compelling to India to join in the future.

“We take the view that New Zealand cannot afford to sit on the sidelines of trade deals and we have seen over time they are able to be improved as is evidenced by our FTA with China,” she said. Ardern and Chinese Premier Li Keqiang separately inked the long-awaited upgrade to the China-New Zealand free trade agreement after a three-year wait.

Onions New Zealand was also positive about the pan-Asia deal.

“The RCEP covers trade among New Zealand and 14 other Asia-Pacific countries, except India. That is half the world’s population,” said Onions New Zealand chief executive James Kuperus.

Onions New Zealand represents 85 commercial onion growers and 18 exporters.

Although details of the agreement are yet to be finalised, there were clear savings and benefits for New Zealand growers and exporters, including the agreement to clear perishable goods within six hours, Kuperus said. New Zealand's global onion exports are expected to reach $170 million in 2019.

India, meanwhile, said its decision to pull out “reflects both our assessment of the current global situation as well as the fairness and balance of the agreement," according to the Times of India, quoting Ministry of External Affairs secretary east Vijay Thakur Singh.

When questioned about whether India might join RCEP in the future, Singh reiterated “India has conveyed its decision to not join the RCEP agreement.”

The decision was backed by Indian farmers in particular. The country's leading milk supplier, Amul, described the move as landmark. India's domestic dairy industry had been vocally opposed to joining RCEP.

(BusinessDesk)

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