Page 5 - ie2 August 2019

MONTHLY MUSINGS

From the Chairman’s Desk

RADE Wars and Trade Negotiations have products, and thereafter final goods, to promote
been the two dominant themes of the Make in India and prevent inverted duties being
Tmonth gone by. Let me begin with the lat- exacerbated further. Moreover, all tariff line-wise
ter since I and my colleagues played some role in import substitution measures taken since 2014
hoping to form the Government of India’s nego- should be in the exclusion list; and (iv) Last but
tiating stance in RCEP. not the least, the Rules of Origin should be the
The Regional Comprehensive Economic Part- same as that of ASEAN FTA to prevent spaghetti
nership Agreement (RCEP) is a proposed free bowl effects for exporters.
trade agreement (FTA) between the ten mem- At the time of writing, the Government of India
ber-states of the Association of Southeast Asian has issued a Press Release, which says ‘the Com-
Nations (ASEAN) and its six FTA partners RCEP merce Secretary Dr Anup Wadhawan, led a dele-
negotiations were formally launched in November gation to the 8th RCEP Inter-sessional Ministerial
2012 at the ASEAN Summit in Cambodia. meeting held in Beijing on 2-3 August 2019. During
In 2017, prospective RCEP member-states ac- the meeting, he highlighted India’s contribution in
counted for a population of 3.4 billion people with shaping the RCEP negotiations till date. He advo-
We need clarity on a total gross domestic product (GDP, PPP) of $49.5 cated a spirit of understanding accommodation and
liberalisation of trillion, approximately 39 percent of the world’s flexibility towards reaching balanced outcome in the
GDP, with the combined GDPs of China and India
negotiations. India’s concerns regarding market access
tariffs chapter- making up more than half that amount. RCEP is and other issues leading to imbalanced trade between
wise. Our the world’s largest economic bloc, covering nearly some of the partner countries was specifically flagged
half the global economy. The 8th Inter-sessional
during the meetings.’
suggestion is that Ministerial Meeting was held in Beijing recently Lack of space prevents me from giving a more
raw materials and before that the Commerce and Industry Min- detailed comment than to just state that trade wars
have begun to simmer, once again, as the US threat-
ister, Mr Piyush Goyal had a series of consultations
should be opened with various stakeholders to understand their ens to impose a further 10 percent increase in duties
up first, then concerns. EEPC India was present in three of such on $300 billion. As expected, China, too, has vowed
intermediate meetings in Mumbai and Delhi. While many issues to retaliate. Simultaneously, Japan and South Korea
have begun their own trade battles over export con-
were discussed, our main contention with respect
products, and to RCEP could be summed up as follows: trols put by the former.
Clearly, these are difficult times for those in the
thereafter final (i) RCEP is essentially becoming a Free Trade foreign trade sector. However, we need to contin-
Agreement between India and China. We believe
goods, to promote the RCEP will be used by China to have such an ue to look for new markets and new products to
Make in India and agreement as otherwise India would never agree tackle and emerge successfully from the global
prevent inverted to a bilateral trade agreement. We already have an trade headwinds.
The good news for our member-exporters is
FTA with ASEAN and comprehensive economic
duties being arrangements with Japan, Korea, Singapore, and that EEPC India has opened four chapters in the
exacerbated Malaysia in the RCEP region. (ii) We have a huge last three months – Coimbatore, Tamil Nadu in
May, Bhilai, Chhattisgarh in June, Jamshedpur,
trade deficit in the RCEP region, particularly,
further with China and the ASEAN countries. Industry Jharkhand and Belgavi, Karnataka in July. We
fears that dropping of tariffs will exacerbate the plan to launch 17 Chapters in 16 States to reach
trade deficit from China, in particular, and there- out to engineering exporters in Tier-II and III
by pour water into Prime Minister’s call for Make cities, who for various reasons cannot effectively
in India. We have, therefore, suggested a cautious utilise our services.
approach of back-loading tariff drops, if at all the
government signs the RCEP.
(iii) We need clarity on liberalisation of tariffs
chapter-wise. Our suggestion is that raw materi-
als should be opened up first, then intermediate Ravi Sehgal

AUGUST 2019 l INDIAN ENGINEERING EXPORTS l 5