India has agreed to eliminate tariffs on an equal number of products for all member countries of the proposed Regional Comprehensive Economic Partnership (RCEP) on the condition that it is allowed to stagger implementation of the cuts over a longer period of time depending on the country involved and the item.

New Delhi has also insisted that services be part of a single undertaking, together with goods and investments, and not a separate agreement.

RCEP countries, including the ten-member ASEAN, South Korea, Japan, China, India, Australia and New Zealand, are trying to create one of the largest free-trade bloc in the world and want to conclude the negotiations by next year.

“The three-tiered approach was given up in favour of a single-tier tariff cut at the RCEP as it was reasoned that in a bloc it could lead to complications. India, on its part, insisted that agreement on services should be part of the single undertaking and that tariff cuts should be staggered and time period for each country would be different,” Commerce and Industry Minister Nirmala Sitharaman told reporters recently.

This is a step back from India’s original position of giving China — the country Indian industry is most apprehensive about in the 16-member bloc — the lowest opening (on about 42 per cent items) in the three-tier structure and also its subsequent proposal of not bringing down tariffs to zero. However, if India is allowed a long-term staggering of the tariff cuts for China, it may lower damage to the Indian industry.

While the RCEP members were working on eliminating tariffs in 10 years, the staggering would logically be done over a longer period, although the details are yet to be culled out.

“We will try to bring in a longer time-frame on most sensitive products from China and some from other countries including Australia and New Zealand—the countries with which we do not have any existing free trade pacts,” a Commerce Ministry official said.

Jakarta meeting India’s proposal of not reducing tariffs to zero but moderating them made at the Jakarta meeting in July did not pass muster because it came too late in the day and also because in all other pacts the country has signed, it has agreed for tariff elimination, the official added. New Delhi is not too keen on elimination of tariffs as it is unhappy with the free trade pacts with countries including Japan and South Korea as numbers show that these have favoured the partner countries more. Although India has insisted on services being part of the single undertaking at RCEP, not much progress has been made in terms of offers made by member countries, especially in the area of movement of professionals.

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