In trying to make sense of Ms. Sitharaman's strong line on services in RCEP, we were drawn to an earlier contretemps in the pages of
The Hindu. On April 20, the paper ran an article under this provocative headline:
"Trading bloc to India: Cut tariffs exit FTA talks." The lead paragraph read as follows:
"India has been told to either agree to eliminate tariffs on most products quickly or leave the talks on the proposed Free Trade Agreement (FTA), being negotiated by the Regional Comprehensive Economic Partnership, the trading bloc comprising 16 Asia-Pacific countries."
The next day The Hindu published an angry response from India's Ministry of Commerce and Industry, calling the April 20 article "factually incorrect and misleading."
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On the one hand, India's reluctance to cut tariffs either quickly or completely is not hard to understand. In a word, the explanation is China. An explanation, however, is not a free pass. Set against India's role in the long and bitter history of the Doha Round, fairly or unfairly, India now faces a test. The question is, can India muster the political will to make the kinds of concessions that big deals require?
And RCEP isn't the only thing that could be affected by the outcome. Lots of people are pushing now for India to be welcomed as the newest member of APEC, the 21 member Asia-Pacific Economic Cooperation forum. In the mid-90s, APEC was a critical incubator for the Information Technology Agreement, and throughout its history, APEC has been an important voice for trade liberalization. So not everyone is jumping on the "India in APEC" bandwagon.
Some are concerned that it stretches the geography of the group too far. India, after all, is in the Indian Ocean, not the Pacific. The larger concern, however, is that India hasn't yet really bought the notion of trade liberalization as an engine for growth. The worry is that, with India in, APEC's vital voice in the global trade conversation would be something less than it has been for the last 27 years.
Former Australian Prime Minister
Kevin Rudd strongly supports India becoming a member of APEC, and recently, the Asia Society Policy Institute, which he heads, issued a report that makes the case for India's inclusion. The report is
"India's Future in Asia: The APEC Opportunity." Speaking at an event at the Indian Embassy in March, Mr. Rudd outlined the Institute's new report. He was unequivocal in his own view, but he was candid about the obstacles. "
[S]ome APEC members," he said,
"are not in favor of India joining the forum because they perceive India as not sufficiently supportive of trade liberalization and regional integration."
Against the background of those concerns, RCEP is something of a test for India. And given the eagerness of some RCEP countries to wrap up an RCEP agreement this year, it may not be a test she can postpone.
