India is set to join talks for creating the world's largest trade bloc, the Regional Comprehensive Economic Partnership or RCEP, comprising Asean members and three manufacturing giants — China , Japan and South Korea — after a committee headed by Prime Minister Manmohan Singh endorsed the move.
The 16 members who will launch talks in Phnom Penh later this month account for over a quarter of the world economy.
Trade & Economic Relations Committee (TERC) signals the government's
intent to drive down import duties further in the coming years, a
proposal that may not get too much support from the domestic industry.
In return, the government is hoping to get a sweeter deal for Indian
nurses, teachers and auditors who want to work in any of the 16 initial
members of the proposed RCEP, which will also have Australia and New
Zealand. Of course, this will come with the promise of allowing overseas
companies easier access by giving them more flexibility in FDI rules.
The biggest concern, however , is the China factor as the Indian government
has so far hesitated in entering into any sort of a trade arrangement
with Beijing, fearing that the market would be flooded with cheap
imports and make the trade deficit look even grimmer . But TERC is
learnt to have taken the view that it would be imprudent to ignore RCEP
as India was taking a 'Look East' view of the world.
Besides,
it is seen as the trading region of the future, with trade expanding
rapidly. The fear in government circles is that entering the bloc late
would entail higher commitments , including a steeper reduction in
import tariffs.
RCEP is seen as a counter to the Trans-Pacific Partnership,
which had Asean members such as Singapore and Malaysia apart from New
Zealand as a founding member, but the agenda is now largely driven by
the US, backed by Canada and Mexico.
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